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Thu February 16, 2012
BP's Oil Slick Set To Spill Into Courtroom
Originally published on Thu February 16, 2012 8:31 am
A federal court in New Orleans is preparing for one of the largest and most complex environmental lawsuits ever to come to court. It stems from the worst oil disaster in U.S. history: the explosion of the Deepwater Horizon rig nearly two years ago and the resulting oil gusher in the Gulf of Mexico.
Testimony is scheduled to begin at the end of the month. The case combines more than 500 lawsuits in one proceeding designed to determine who's responsible for what went wrong.
One area still struggling to come back from that disaster is Bon Secour, Ala., a sleepy fishing village on the Bon Secour River just off Mobile Bay. Here, pelicans and osprey camp out on docks that were once lined with shrimp and oyster boats.
"It's an old French fishing village. The rough translation is 'safe harbor' or 'good harbor,' " says Chris Nelson, vice president of Bon Secour Fisheries, a Gulf seafood processing company that has been in Nelson's family for four generations.
At the fisheries' processing plant, big burlap sacks of Louisiana oysters are dumped onto a conveyor belt, where workers sort out which ones will be boxed to be served on the half shell and which will go to the shucking room to be sold by the gallon. The plant is busy but not at full throttle.
"We're nowhere near back to where we were before," Nelson says, referring to life before the April 2010 well explosion. "When we first heard of the explosion and 11 people killed, that was awful and we felt badly for those families and knew that it was a terrible tragedy. But then we began to hear that, hey, there's another problem, and that's that they may not be able to shut off the oil leak. The more we heard, the more concerned we got until we realized that this was going to be a full-blown crisis."
The uncontrolled well spewed some 200 million gallons of oil into the Gulf.
Harvest closures shut down processing for much of the spring and summer of 2010. When he was able to get oysters and shrimp again, Nelson says, nobody wanted to buy them.
"The biggest impact is people's loss of trust in the goodness of what we have, the wholesomeness of what we have," he says.
Despite government monitoring and assurances that Gulf seafood is not contaminated, Nelson's business is still down about 40 percent. That's why he joined the hundreds of thousands of other claimants from the five other Gulf states in asking a New Orleans federal judge to see to it that they are made whole.
Nelson's fellow claimants include oyster harvesters, shrimpers, waiters and housekeepers. There are also tourism interests; cleanup workers; and federal, state and local governments.
About 193,000 people have taken payouts from a $20 billion compensation fund set up by BP, which was leasing the rig at the time. But Nelson says the future is still uncertain because no one can predict the final impact of the Gulf oil spill.
"I think there's a complete lack of understanding that maybe the fender on the car got fixed, and they gave me a Band-Aid for my head where I hit it on the steering wheel," he says, "but all the aftereffects that we may not even completely understand what they're going to be ... we've got to be ensured against that in some way."
Before the court attempts to put a number on damages, which some have estimated could be upward of $25 billion, it has to sort out exactly what happened offshore.
The Question Of Gross Negligence
Martin Davies, director of the Maritime Law Center at Tulane University, says the first phase of the trial will focus on the activities of the oil company (BP); the rig owner (Transocean); and contractors, including the cementer (Halliburton) and the maker of the failed blow-out preventer (Cameron).
The goal is to determine who caused what and who is responsible for the sinking of the rig and the release of all that oil from the well, Davies says. According to him, the allocation of damages will eventually depend on the rather murky question of whether the companies were grossly negligent.
"Gross negligence is a phrase that appears in lots of these offshore exploration contracts," he says. "It's not a very clearly defined phrase. There's a lot of law about what is negligence. There's not so much law about what is gross negligence."
BP Chief Executive Robert Dudley recently spoke to investors about the upcoming trial.
"We do not believe BP was grossly negligent," he said. "We have confidence in our case, and we look forward to presenting evidence when the trial begins."
In Search Of Fault
But Dudley also said BP would like to put the litigation to rest. He told investors, "We're ready to settle if we can do so on fair and reasonable terms. But we are preparing vigorously for trial."
Attorneys general in the five Gulf states say they are open to settling environmental damage claims. Mississippi Attorney General Jim Hood says any deal would have to consider future fallout.
"It will be on terms that the scientists tell me that we can foresee that will allow us to recoup what we're actually owed if we see damages seven, eight, 10 years down the line," he said.
None of the parties involved in the case, including the U.S. Justice Department, would discuss settlement negotiations, but many observers expect some sort of a deal before the trial gets too far along.
"I can guarantee you this will not go to verdict," says Daniel Becnel Jr., a plaintiffs lawyer in Reserve, La., who has been involved in other major tort settlements.
Despite having filed one of the first lawsuits over the Gulf oil spill, Becnel says he doesn't think the trial is necessary.
"We don't really need a trial," he says. "Why do we need a trial to apportion fault? That's what this trial is all about, to apportion fault and for potential punitive damages. BP has admitted liability, and they can pay it."
Becnel says the evidence about what happened has already come out during government investigations of the disaster. He is advising most of his clients to take a final settlement from the BP claims fund and opt out of any global settlement that might come from the case in New Orleans.
"This is a giant, giant money grab by the plaintiffs bar that is going to come out of the pocket of innocent victims," he says.
But lawyers involved in the trial say it will be the first real opportunity for oil spill victims to hear the whole truth.
"There's only one place where a waitress or a shrimper can be on equal footing with a company the size of BP, and that's a courtroom," says Rhon Jones, with the Montgomery, Ala., law firm Beasley Allen. Jones is part of the plaintiffs' steering committee, a group of lawyers coordinating the case.
Unlike Becnel, he expects that the trial will uncover new details about what went wrong.
Nelson of Bon Secour Fisheries says he just wants the truth.
"How careless were they?" Nelson asks. "Or was this just an unfortunate accident?"