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US Experts Agree: Spill Caused “Severe” and “Serious” Environmental and Economic Damage

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After four days of testimony, the United States (“US”) wrapped up its case in chief against BPXP regarding the imposition of Clean Water Act (“CWA”) civil fines and penalties in connection with the massive BP Oil Spill. US expert testimony concluded on Friday, January 23, 2014.

During its case, the US focused on the impact of the spill, specifically the social, economic, and environmental impacts, as well as the response to the spill, and finally the ability of BP/BPXP to pay the fine. The Government argued that, given the impact and response to the spill, BPXP should be fined the maximum allowable penalty of $13.7 billion, or at the very minimum $11.7 billion.

The United States called several live witnesses in furtherance of its case:

Admiral Meredith Austin: Testimony was focused on the Coast Guard’s response to the oil spill in which it “used [an] unprecedented amount of resources in this response” because “massive amounts of resources were required for this response given its size.” Transcript, p. 102-103.

Dr. Diane Austin: The focus of this witness was on the sociocultural effects of the BP Oil Spill on the Gulf of Mexico communities. Her opinion is that the spill “caused serious and widespread sociocultural harm. Number one, it disrupted livelihoods and patterns of daily living. It exacerbated social and economic inequality. It challenged individual and collective identity, fostered conflict and divisiveness, and disempowered local governments and NGOs. In addition, BP’s criticisms trivialized the harm to the Gulf Coast communities.” Transcript, p. 160. It also caused “widespread disruption across all of the economic sectors that we studied and including their commodity chains.” Transcript, p. 174.

Dr. Richard Clapp: This witness considered the health impacts of the spill. “There are substantial and numerous health effects for people who were [ ] exposed in the Deepwater Horizon explosion and subsequent activities” but “the long-term effects will be observed in future studies.” Transcript, p. 248. “Thousands of injuries and illnesses were then documented amongst cleanup workers, volunteers, and others exposed during that time period.” Transcript, p. 248.

Dr. Donald Boesch: His focus was on the components of the ecosystem harmed by the oil spill. Generally, he concluded that the spill “did result in serious harm to a number of components of both offshore and coastal systems. Basically everywhere the oil went, it created harm.” Transcript, p. 341. Specifically, actual and potential harms to fisheries and plankton were observed as well as “serious permanent consequences” to marshes. Transcript, p. 342-343, 408.

Dr. Stanley Rice: Testimony concerned the toxic harm of the spill. He concluded that there was toxicological exposure and harm as a result of the spill. Transcript, p.477-478. “I think there is certainly the potential for harm, and that’s evidenced by several of the peer-reviewed papers that I’ve seen come out of the spill.” Transcript, p. 493.

Capt. Mark VanHaverbeke: He was asked to opine on spill response, and spill response research and development which he described as “an ongoing process. New or innovative technologies and techniques developed [ ] during the Deepwater Horizon were developed as a part of the Unified Command and the management team as a whole [ ] and response relied primarily on existing technologies.” Transcript, p. 617.

Dr. Charles Mason: Testimony of this oil and gas economics and econometrics expert focused on the magnitude of the economic harm as a result of the spill and on the role of BP-BPXP in the US Gulf of Mexico economy. Transcript, p. 690. He found that economic harm from the oil spill was “severe.” Transcript, p. 694. The severe economic impact as a result of the spill effectuated “ripple effects” in businesses throughout the Gulf of Mexico. Transcript, p. 698.

Mr. Gardner Walkup, Jr.: This witness concentrated on the role of non-operator/owner (Anadarko) in deepwater Gulf of Mexico drilling operations. He concluded that a non-operators focused, active participation in a well increases the quality of the deepwater activities, Anadarko’s position that non-operators as passive investors is inconsistent with industry practice, that Anadarko’s position and this case will inform non-operators on future drilling activities and decisions, and that a material Clean Water Act penalty will incentivize non-operators to pursue active participation, while the lack of a penalty will make passive behavior more likely. Transcript, p. 819-820.

Dr. Fred Quivik: This expert researched and analyzed the organization of the BP operations in the Gulf of Mexico at the Macondo well and in the response to the Macondo disaster for purposes of analyzing the extent to which BPXP and other BP entities did/did not manage facets of those operations. He concluded that BP divided its global operations, delegations of authority and direction existed in BP’s organizational structure for managing operations function without regard to the numerous subsidiary corporations (including BPXP), the BP p.l.c. board of directors provided oversight of BP’s operations throughout the world including at the Macondo well as well as BP’s response to the blowout, and BP has developed centralized common processes, management and financial systems that apply to the entire BP Group (including in the Gulf of Mexico). Transcript, p. 916-917.

Dr. Ian Ratner: This expert was asked to look at the economic impact of a CWA penalty on the violator, BP-BPXP and their ability to pay the maximum CWA civil fine. The expert found that BPXP & BP have the ability to pay the maximum CWA penalty, that neither would suffer a long-term impact, and that each have the financial flexibility to do this (funds from multiple possible sources). Transcript, p. 1016.

BPXP begins its defense of the imposition of a CWA fine on Monday, January 26, 2015. It is expected that BPXP will call its own experts to rebut the US’s positions on the economic and environmental harm from the spill and its response to the spill, very likely highlighting its various mitigation efforts.



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