The 2010 Deepwater Horizon disaster left 11 men dead and huge stretches of sea and coast fouled with oil

BP back in court over Deepwater Horizon spill

BP is back in court on Monday for a trial to rule on how much oil it spilled into the Gulf of Mexico in 2010.

The hearing in New Orleans is second of three phases of a trial determining responsibilities for the worst marine pollution ever seen in the USA, which could, in the worst case scenario, land the British firm with a bill five times greater than the $3.5bn (£2.2bn) it has set aside for fines.

A first phase, which wrapped up in April, looked at dividing blame among BP and its contractors, Transocean and Halliburton, for the 2010 disaster which left 11 men dead and huge stretches of sea and coast fouled with oil.

Expected to last a month, this second part of the process will be crucial for shareholders in estimating some of the extra cash BP could end up paying out beyond the $42.4bn it has so far made provision for in its accounts to cover the clean-up, compensation and fines.

US District Court Judge Carl Barbier, renowned for setting a fast pace, is expected to announce his findings and penalties after a third phase of the trial, likely next year.

Much depends on how the court rules on a dispute between BP and the US government over how many million barrels of oil were actually spilled, and on just how culpable BP was in failing to stop it for 87 days.

BP says 3.26 million barrels leaked from the well during the nearly three months it took to cap the blowout at the Deepwater Horizon rig but the US government says it was 4.9 million. Both those totals include 810,000 barrels that were collected during clean-up and which Barbier has agreed to exclude.

This month, BP's lawyers questioned the government's figure. "US experts employ unproven methods that require significant assumptions and extrapolations in lieu of ... available data and other evidence," they said in a filing.

They have also sought to convince Barbier that if the company is to be found guilty, it should amount to only "negligence" and not "gross negligence" – a crucial distinction since the latter carries much higher maximum penalties.

Under the Clean Water Act, negligence can be punished with a maximum fine of $1,100 for each barrel of oil spilled; a gross negligence verdict carries a potential $4,300 per barrel fine.

If the court judged the spill to have been 4.09 million barrels – the government estimate less oil recovered – the price of negligence could reach $4.5 but gross negligence, in the costliest scenario, could run to $17.6bn.

BP has only $3.5 billion set aside in its provision – almost all of which is already accounted for by this and other costs.

Even after the Clean Water Act fines are set, BP may face other bills from a lengthy Natural Resources Damage Assessment, which could require BP to carry out or fund environmental restoration work in the Gulf, as well as other claims.

Once Britain's biggest company, BP has also filed a lawsuit against the US Environmental Protection Agency. The EPA has banned it from bidding for new federal fuel contracts or new Gulf of Mexico drilling licences. Despite the Deepwater Horizon spill, BP is still the biggest single holder of licences in the Gulf.

The EPA imposed the measure a year ago after BP pleaded guilty to criminal charges, citing the company's "lack of business integrity" after the fatal accident. BP has filed more than a dozen motions and appeals all told.

"We are digging in and are well prepared for the long haul on legal matters," Chief Executive Bob Dudley said in July.

A flurry of filings by the company – along with newspaper adverts criticising the high costs of the settlement agreement and television commercials urging tourists to return to the Gulf coast for fishing and birdwatching have irked environmentalists.

"They are softening the beachheads for appeals down the road," said David Yarnold, president of the National Audubon Society, a wildlife conservation group. "And trying to buy American public opinion and avoid paying for what they broke."

He said it would take decades for scientists to fully gauge the impact of the spill on fish and wildlife.

"BP's happy-talk commercials make it sound like it's all taken care of," Yarnold said. "And it's not."

A BP representative did not comment when asked about its legal strategy and ads.

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