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Business

BP trial to focus on oil spill’s size

Extent of 2010 Gulf disaster is key to damages

HOUSTON — With billions of dollars in penalties at stake, the civil trial of the British oil company BP begins its second phase Monday, which will set the amount of oil that spilled into the Gulf of Mexico from the 2010 Deepwater Horizon rig explosion, which killed 11 workers and soiled hundreds of miles of beaches.

The government will argue that a total 4.2 million barrels of oil was discharged into the sea over 87 days, the equivalent of nearly one-quarter of all the oil that is consumed in the United States in a day. BP will counter that the number was closer to 2.45 million barrels. This phase of the trial will also determine if BP prepared adequately for a blowout and if it responded properly once the oil started flowing.

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Both sides will present their case in US District Court in New Orleans using competing technical calculations over the next four weeks. Hanging in the balance are Clean Water Act fines that range from a maximum of $1,100 for every barrel spilled through simple negligence to as much as $4,300 a barrel if a company is found to have been grossly negligent.

“This will be largely a battle of experts,” Blaine G. LeCesne, a law professor at Loyola University New Orleans.

The first phase of the trial, which took place over two months this year, centered on whether BP and its contractors were guilty of gross negligence — tantamount to wanton and reckless behavior — in causing the blowout of the Macondo well.

Judge Carl J. Barbier has not ruled yet on the question in the bench trial. But if he agrees with the government’s position that there was gross negligence and that 4.2 million barrels was spilled, the fines could amount to more than $18 billion.

“They would have to sell assets to keep the company afloat,” said Fadel Gheit, a senior oil analyst at Oppenheimer & Co. “It would wipe out all of their cash.”

But if BP’s position is upheld that there was simple negligence and only 2.45 million barrels was spilled, then the total fines would amount to roughly $2.7 billion. In all likelihood, a decision or settlement will reach a dollar figure in between, legal experts say.

BP pleaded guilty in 2012 to 14 criminal charges, including manslaughter, and admitted negligence in misreading important tests before the explosion. It also agreed to pay $4.5 billion in fines and other penalties. Four current or former employees also face criminal charges.

The second phase of the trial will determine not only how much oil spilled, but whether BP was negligent or grossly negligent for not being prepared for a spill and during its efforts to stem the flow of the well between April and July 2010.

The plaintiffs, which include the federal government, several Gulf states, and private claims seekers, have argued in papers that BP “repeatedly lied to key decision makers about the flow rate of the well.”

The contractors Halliburton and Transocean have joined with the plaintiffs and government in arguing that BP lied about the flow rate, delaying the final capping of the well.

Transocean has already pleaded guilty for its role in the spill and agreed to pay $1.4 billion in civil and criminal fines. Halliburton pleaded guilty to criminal charges for destroying computer test results that had been sought as evidence and agreed to pay $200,000 in fines.

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