Deepwater Horizon Litigation: Where Things Stand and What is Next
On Wednesday, January 14, we hosted a webinar on the litigation summarized below. The webinar featured a panel of experts to discuss the status of the litigation and what is next. You can read more about the webinar and view a recording when it is posted here.
The Disaster and the Trial
On April 20, 2010, an explosion rocked the Deepwater Horizon mobile offshore drilling unit. Eleven crewmen lost their lives in the blast, and the rig burned for the next thirty-six hours. Over the next three months, oil gushed from the wellhead into the Gulf of Mexico, impacting more than 1,000 miles of coast.
The Deepwater Horizon disaster spurred numerous lawsuits. The trial that is the subject of this blog is largely focused on Clean Water Act (CWA) civil penalties related to the oil spill. Two phases of the trial have already been completed, with the next phase set to begin on January 20. The third phase will focus on eight factors set out in the CWA, which must be taken into account in determining civil penalties. This has important implications for the 80% of CWA penalties that will be channeled through the RESTORE Act for economic and ecological recovery activities in the Gulf.
But before we talk about Phase III, it’s important to know where things stand leading up to January 20.
Where Things Stand
One of the main issues being tried by the court is the determination of civil penalties under Section 311(b) of the Clean Water Act. CWA Section 311 provides several factors for determining civil penalties for any “owner, operator, or person in charge of any vessel, onshore facility, or offshore facility” from which oil is discharged. Among the factors considered are the violator’s conduct (the subject of Phase I of the trial) and the number of barrels of oil discharged (one of the subjects of Phase II of the trial). In addition, the court must take into account eight factors enumerated under the CWA, described below (the subject of Phase III of the trial).
Phase I: The Incident Phase
Phase I of the trial (the “Incident” phase) began on February 25, 2013. It addressed fault relating to “the loss of well control, the ensuing explosion and fire, the sinking of the Deepwater Horizon, and the initiation of the release of oil from the well.” In this Phase, one of the main issues was whether BP (and other parties responsible for the spill) acted with gross negligence. This is an important factor in determining civil penalties since:
The court issued its “Findings of Fact and Conclusions of Law” for the Phase I Trial on September 4, 2014. Among other things, it considered the unique risks of deep-water drilling and acts/omissions by the parties. In its ruling, the court held that the oil spill “was the result of [BP’s] gross negligence or willful misconduct.”
In addition to its ruling on gross negligence, the court also made rulings under maritime law. This included a ruling on comparative fault: BP was assigned 67% liability for the disaster, Transocean 30%, and Halliburton 3%. Also under maritime law, the court held that, although BP’s conduct would generally make it liable for punitive damages, they did not apply here. The court based this decision on Fifth Circuit precedent, which the court interpreted as requiring conduct that emanated from corporate policy or a corporate official with policy-making authority (here, the judge held that the conduct at issue was by employees without such authority).
In sum, the gross negligence ruling means that BP is subject to enhanced penalties. BP has appealed the ruling.
Phase II: Source Control and Quantification Phase
Phase II of the trial (the “Source Control” and “Quantification” phase) began on September 30, 2013. It addressed conduct to stop the spill (“Source Control”) and the amount of oil actually discharged into the Gulf of Mexico (“Quantification”).
Source Control: BP argued that its actions to halt the ongoing spill should reduce its civil penalties and contended that it acted “as quickly and safely as practical” to stop the spill, spending $1.6 billion in the process.
Quantification: BP argued that 2.45 million barrels of oil were discharged into the Gulf of Mexico; the U.S. argued that 4.2 million barrels were discharged into the Gulf (both parties agreed that 810,000 barrels were captured before being discharged into the Gulf of Mexico). Much of the Phase II trial centered on methodology and assumptions used to estimate oil flow rate during the 87 days of the spill.
The court issued its “Findings of Fact and Conclusions of Law” for the Phase I Trial on January 15, 2015. In the ruling, the court held that “BP was not grossly negligent, reckless, willful, or wanton in its source control planning and preparation” and that “nothing from the Source Control segment alters” Phase I findings. For the purposes of calculating maximum civil penalties, the court found that “3.19 million barrels of oil discharged into the Gulf of Mexico.”
What is Next
Phase III: The Penalty Phase
Phase III (the “Penalty” phase) will determine the amount of civil penalties under the CWA. The Phase I “gross negligence” ruling means that BP is subject to enhanced penalties. Phase II found that 3.19 million barrels of oil were discharged into the Gulf of Mexico. Therefore, if the maximum penalty is applied, total civil penalties would be $13.7 billion.
*As noted above, the court has yet to determine the amount of the maximum enhanced per-barrel penalty. Here we use $4300 per barrel, the amount in an EPA regulation (though the amount is in dispute).
The court must, however, take into account eight other factors under the CWA when determining civil penalties. These factors will be the subject of the Phase III trial.
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In its pre-trial statement for Phase III, the US urged the court to take a top-down approach, and to levy the maximum civil penalty (now $13.7 billion) unless mitigating circumstances exist. The primary contention of the US is that BP’s “willful misconduct, the enormity of [the] spill and its impacts, and the comparatively miniscule economic benefit” should result in the maximum penalty. BP, meanwhile, contends that CWA civil penalties are designed to deter behavior that might lead to environmental harm and to incentivize effective response actions, and it argues that both purposes are furthered by penalties at the lower end of the statutory range.
Based on pre-trial statements of the parties, some issues that the parties may focus on in the Phase III trial include:
Whether and how much BP should be credited for response expenses and CWA criminal penalties that have already been levied against the company
Whether BP’s history of prior violations demonstrate an increased need for deterrence through fines closer to the statutory maximum
Whether BP’s response to the spill demonstrates minimization or mitigation efforts that should decrease its civil penalties
Whether the penalty will have a severe economic impact on BP. An important issue included in this determination is whether the analysis focuses on BP as a whole or just its subsidiary, BP Exploration & Production.
Whether BP’s efforts in the Gulf (particularly its economic efforts) qualify as “other matters as justice may require”
Whether the CWA factors do or do not justify penalizing Anadarko
Nearly 5 years have passed since the start of the Deepwater Horizon disaster. Moving into Phase III of the trial, the possible outcomes have narrowed due to findings and arguments made in Phases I and II. However, until the final ruling is issued or a settlement is reached, any predictions would be speculation. It is also likely that the parties will appeal any decisions that are adverse to their positions.
As the start of Phase III approaches, one thing is certain: we’ve come a long way in the process of determining CWA civil penalties, and (absent a settlement) there could be a long way to go.
-ELI’s Gulf Team, January 14, 2014 (updated Jan. 15)
By: Read Porter, Senior Attorney, Director of Invasive Species Program
October 30, 2014
Fisheries observers serve important roles in fisheries management. From a scientific perspective, they provide independent verification of the amounts and types of fish caught, providing key data for stock assessment. In some fisheries, observers also have an important enforcement function: they report to law enforcement when they witness violations of fisheries regulations. In 2010, I published an article, based on NOAA’s enforcement data, showing that observer reports are a key source of information for understanding fishers’ compliance while at sea. With observer information, enforcement agents can take action to investigate and prosecute violators who are undermining fishery sustainability, and fisheries managers can design better regulatory systems to increase compliance.
Just last week, NOAA lawyers successfully concluded three cases for $1.75 million against American Seafoods Company (ASC). Observers first broke the case when they noticed and reported that ASC was tampering with the scales on its massive pollock fishing vessels. As a result, ASC caught more fish than it was allowed to over a five-year period, overfishing and threatening the long-term sustainability of the world’s second largest fishery—a resource that provides filet-o-fish sandwiches for McDonald’s, artificial crab meat for sushi, fish fingers for Bird’s Eye, and many other products. Observer reports led to an investigation by the Office of Law Enforcement (OLE) and eventually to a case prosecuted by NOAA’s General Counsel. What can we learn from this case?
1. We need a strong fisheries enforcement program to ensure that fisheries are as sustainable in practice as they are on paper.
2. Observers are a critical component of fisheries enforcement systems.
Unfortunately, with some exceptions, US fisheries managers are ignoring both lessons. After a multi-year, comprehensive review of OLE practices, NOAA is still struggling to enforce the law—especially in areas like New England where the need is greatest due to the collapse of Atlantic cod and other groundfish.[i] Without strong and effective enforcement, these and other fisheries are seeing substantial illegal fishing that undermines stock rebuilding and sustainability. In addition, US observers are only required to report violations in the North Pacific—even though ELI’s work and enforcement cases like the one settled last week clearly show the value of observers for enforcement.
Managers in other regions have fought to limit the use of observers for any purpose other than science. First, some opponents of the idea argue that observer reporting would bias the scientific data that observers collect because it would change the way fishers act. However scientific evidence already shows that fishers behave differently when there is an observer on board, regardless of that observer’s role—in other words, the data collection is already biased.
Second, opponents argue that observer reporting could result in physical danger to observers from fishers. Observers face many dangers at sea—and sadly, this sometimes includes danger from fishers who view observers as unwelcome guests on fishing vessels. Our data show that observers around the U.S. regularly report harassment. North Pacific observers report harassment and interference more than twice as often as observers in other regions [ii]—so concern about observer safety in a mandatory-enforcement-reporting world are worth taking seriously. However, more work is needed to determine if this difference is a result of an increase in threats to or actions against observers or if there is some other cause—for example, observers trained to report violations may be more aware of what conduct constitutes harassment and more willing to report these violations when they occur. In the meantime, the answer is not to strip observers of responsibility, but to ensure that harassment and interference reports are investigated and prosecuted swiftly and seriously.
The time is ripe for Congress, NOAA, and regional fishery management councils to move forward together to strengthen fishery enforcement by requiring observers to report violations that they witness, and by committing to protect observers while they are at sea.
[i] Gulf of Maine cod is at an all-time low—just 3-4% of the population needed for a healthy stock.
[ii] Based on NOAA enforcement data and information on sea-days sourced from the National Observer Program FY 2012 Annual Report, observers report one harassment violation every 275 sea-days versus one in 641 days elsewhere, and an interference claim once in 155 days in the North Pacific versus one every 412 elsewhere.
Deepwater Horizon Project Tracking
By: ELI Ocean Program
September 24, 2014
In the Gulf of Mexico region, 89 projects to date have been finalized for restoration and recovery in the wake of the Deepwater Horizon oil spill. These projects are funded under several different mechanisms, including the Natural Resource Damage Assessment process and the National Fish and Wildlife Foundation’s Gulf Environmental Benefit Fund. Over the coming years, hundreds if not thousands of projects will be finalized under these mechanisms, the RESTORE Act, and other processes.
The projects are often accompanied by lengthy descriptions and analysis, from cost and project descriptions to environmental review and ongoing maintenance and monitoring. With this wealth of information available or forthcoming, it becomes important to understand how it all fits together, and how Deepwater Horizon recovery projects will contribute to long-term ecosystem health and sustainability in the Gulf.
So the big question is:
How can we summarize thousands of pages and hundreds of thousands of words to paint a more complete picture of Gulf restoration that informs decisionmakers and the public?
ELI’s Ocean Program and other organizations are trying to answer that question. To find solutions, we must keep in mind three important points:
1. It is difficult to track the various restoration and recovery processes as they move along, and it is only going to get more difficult as more funding is made available.
2. Easy access to understandable information leads to meaningful public engagement, enhances transparency, and increases opportunities for collaboration.
3. Geospatial information, user-friendly data layers, and tracking tools can help stakeholders and policy-makers make efficient and accurate decisions.
What are the tracking tools, and how can you use them?
The Ocean Program manages a searchable database for all restoration projects that have been finalized to date. The database allows users to filter results by state and then by funding mechanism, and to find projects by state or county/parish through a search function. These tools attempt to track the projects as they are announced so people can see where the money is being spent, along with some details about specific projects.
The Gulf of Mexico Alliance has a map of restoration projects and other efforts related to priority issues in the Gulf (not limited to projects receiving Deepwater Horizon recovery funds). It is an example of how maps may be especially useful at providing geospatial information and summarizing thousands of projects in a single snapshot.
The Ocean Conservancy has produced a map of NRDA and NFWF restoration projects funded through May 2014.
Finally, the NRDA Trustee Council maps all proposed Deepwater Horizon NRDA restoration projects and provides detailed information on projects that have been selected for early restoration.
What is next?
One thing we know for certain: there are many more projects coming over the next several years. As ELI refines its project tracking tools, our first priorities are to keep the current tools up to date and to incorporate feedback and suggestions to create the most useful information possible for the public and stakeholders.
Our long-term priority, however, may turn out to be the most exciting:
What if we incorporated all of the information from the databases and the maps into a single, straightforward, and simple mapping tool that anyone can use?
Those efforts are underway now, led by the Gulf of Mexico Alliance, the Trust for Public Lands, and Ducks Unlimited, with ELI’s Ocean Program and other entities participating in information-gathering for the new tracker. Read about this initiative here.
What is the final goal for Deepwater Horizon project tracking?
Thousands of words have been written on Gulf restoration and recovery projects, and many thousands more are coming. Very few people have the time or energy to understand how each individual project fits into the broader recovery picture. But by transforming those words into an easier-to-understand picture, our goal is to make participation in the recovery process something that is not limited to those with technical expertise; our hope is to use database and mapping tools to bring information about Gulf restoration and recovery to all.
August 6, 2014
It is an invasive species that is one of the most pressing threats to ocean ecosystems in the Caribbean and Gulf of Mexico. And my wife was wearing one on her ear.
My wife had just bought these beautiful earrings, made from the spines of the venomous red lionfish (Pterois volitans), from a studio in Rincon, Puerto Rico. Later that trip, we shared delicious empanadas con pez leon. The jewelry and the food share a common thread—using markets as a tool to control the raging lionfish invasion that is wreaking havoc on Caribbean and Gulf coral reef ecosystems.
Red lionfish are native to the Pacific and Indian Oceans, where they share the reefs with and are kept in check by other species that co-evolved with them over millions of years. But the story in the Atlantic is very different. DNA evidence indicates that the Atlantic lionfish invasion began with a small number of female lionfish that escaped or were intentionally released from captivity and first observed in the Atlantic in 1985. Lionfish are voracious carnivores capable of consuming half their weight in a single feeding, and they are highly fecund, producing 30,000 eggs every four days in warmer climates. As a result, the initial escape of a handful of individuals proved the vanguard of a much bigger problem.
Today, red lionfish and their cousins, common lionfish (Pterois miles) are widespread across the Caribbean and Gulf of Mexico—in some places they reach concentrations of up to 1000 lionfish per acre. These lionfish are causing substantial economic and environmental harm, as well as harm to human health. They get into lobster traps, where they reduce catch and can sting fishermen; they compete with other economically-important fish (such as snapper); and they deplete herbivorous fish that keep algae in check, undermining reefs’ ability to respond to stressors like climate change and ocean acidification as well as affecting tourism.
While we can’t get rid of lionfish entirely, scientists, lawyers, fishermen, community members, and others are all working to limit its harm—and my wife’s earrings are part of the story.
1. Prevent the introduction of other lionfish and scorpionfish!
So far, 2 species of lionfish are established in the Atlantic, but at least another 10 species are commonly in trade in the United States (see pp. 11-12) and could be introduced at some point in the future—and there are hundreds of other scorpionfish species, every one of which is venomous and few of which are native to the Atlantic. For example, stonefish (Synanceia spp.) are the world’s most venomous fish, and their stings cause intense pain—a fact that many Indo-Pacific swimmers and even researchers have learned to their lasting regret—but they can be and are purchased in the aquarium trade.
Despite their potential to harm the economy, environment, and human health, neither the species that are already here nor any other related species are on the list of “injurious wildlife” maintained by the Fish and Wildlife Service. As a result, importation and trade in these species continues unabated, and it’s only a matter of time until the next species is introduced to our waters. New injurious wildlife listings take years, so it’s important to get the process started now, before it’s too late. Congress can help, too—just two weeks ago, the Senate Subcommittee on Water and Wildlife held a hearing on a bill that would reform the injurious wildlife listing process—a long overdue step. And the House Natural Resources Committee may take up the lionfish issue soon.
States are getting in on the prevention action. Florida previously outlawed importation of red and common lionfish, but just last week expanded its protections to cover all Pterois species—a step forward, even though there’s a long way to go before the full range of potentially invasive scorpionfish are adequately regulated. If other states follow suit, the risk of future invasions can be substantially reduced—even if the federal government doesn’t take action.
To learn more about injurious wildlife, watch our recent webinar:
2. Implement Strategic Management Laws and Policies
Prevention is the most important and cost-effective strategy for managing invasions, but we can also take concrete steps to manage the fish that are already here. In the United States, the Aquatic Nuisance Species Task Force will soon act to adopt a national lionfish management plan—a critical step that will help us identify priority areas and habitats in need of special protection, what strategies we use to knock back the population, and how we may need to adapt our laws to manage the problem. Control efforts will require all stakeholders to work together.
Derbies represent one key strategy for engaging the fishing community in lionfish control. Last month, local fishermen in Barbuda competed for $2,500 in prizes for the largest lionfish catch—and along the way, they learned how to safely handle lionfish. Check out our work with the Barbuda Blue Halo Initiative.
Market measures are also promising—lionfish are tasty and can be used to make beautiful goods. In Texas, lionfish meat can sell for up to $18 per pound. Governments can participate in these new markets by providing financial and technical support for fishermen, distributors, and consumers, by purchasing lionfish directly, and—most importantly—by ensuring that regulations do not unnecessarily restrict harvest of invasive species. Florida has taken the lead here as well—in the rule issued last week, the state authorized spearfishing for lionfish in certain instances and began the process of ensuring that open season on lionfish continues year-round.
Lionfish are an integral part of ecosystems in the Indo-Pacific. But they are a destructive force outside of their native habitat. The threat facing Atlantic, Caribbean, Gulf of Mexico, and even South American reefs is severe, but there is still hope. If we can move enough lionfish off our reefs and onto our plates and ears, we can limit the destruction—and if we can learn a lesson from lionfish, we can protect the ocean by stopping the next invader before it arrives.
Understanding the Great Unknowns and Preventing Permanent Harm to the Deep Ocean
May 16, 2014
Also, today, the International Seabed Authority closes its “stakeholder survey,” soliciting information about how to design a regulatory framework for deep seabed mineral exploitation. Driven by expanding interest in exploiting the deep ocean, the Seabed Authority is designing the legal framework that may determine the long-term health of the largest living space on Earth. Nations too are taking steps to lease their seabeds for mining activities. In light of these important legal developments, it is worth pausing to consider the special nature of the deep ocean and how to best manage it.
Scientists consider waters and seabed below 200 meters in depth as part of the deep ocean. It is a place of extremes—extreme size, extreme depth, extreme pressure, extreme darkness, and extreme unknowns. Yet human understanding of deep ocean ecosystems is considerably limited in comparison to the rest of Earth’s ecosystems. No doubt this lack of understanding is a result of the high cost, technology requirements, and dangers of working at depth.
While knowledge of the deep may be limited, human impact is ongoing. From intentional dumping, accidental spills, and land-based runoff, the deep sea bed and water column have been and are being polluted with anthropogenic waste. At the same time, human exploitation is moving deeper. Fishing vessels scour the deep with trawls. Oil and gas companies drill a mile below the sea. Mining companies explore the potential to extract manganese nodules across nation-sized swaths of the abyssal plains. Even the effects of climate change are already visible in the deep ocean.
As with all natural systems, the deep ocean ignores jurisdictional boundaries. The deep ocean is found in territorial seas, exclusive economic zones, continental shelves, and areas beyond national jurisdiction. In most instances, frameworks for managing deep ocean activities include general environmental laws or ocean laws, but few laws focus specifically on human activities in the deep ocean. Yet deep ocean environments share a suite of characteristics that make them special when considering how best to manage human impact to these regions.
Attributes of the deep ocean—from physical characteristics, to ecosystems, to research and monitoring—should inform management decisions. In particular, the overwhelming lack of information and high cost of research and monitoring are key attributes that should inform deep ocean management. These, combined with the recognition that many deep ocean ecosystems are slow to grow and once lost may never recover, should guide the development of key principles for deep ocean management.
In particular, I suggest two guiding principles for deep ocean management:
(1) The extreme limits of human knowledge of the deep ocean require minimization of human impact in order to avoid significant and permanent harm.
(2) Lack of knowledge of the deep ocean calls for mechanisms to expand deep ocean research in order to enable sound decision-making and expansion of appropriate utilization of the deep ocean.
With development of regulations for deep seabed mining underway in national and international waters, now is the time to take action to ensure that these new uses are developed in a way to protect and maintain the long-term health of the common heritage of mankind and the water column above it. We must take steps to understand the great unknowns and prevent permanent harm to the deep ocean.
–Kathryn Mengerink, email@example.com
Co-Director, Ocean Program
Deepwater Horizon: Four Years Later
April 20, 2014
Four years ago today, on April 20, 2010, an explosion rocked the Deepwater Horizon mobile offshore drilling unit. Eleven crewmen lost their lives in the blast, and the rig burned for the next thirty-six hours. Then, 41 miles off the southeast coast of Louisiana, the Deepwater Horizon sank. At the wellhead, nearly a mile underwater in the Gulf of Mexico, the environmental disaster was just beginning. Oil gushed for the next three months, during which millions of barrels of oil mixed with millions of gallons of dispersant to contaminate more than 1,000 miles of coast.
New pictures released in Daniel Beltrá’s book “SPILL” show some of the acute impacts on the Gulf in the month after the April 2010 explosion. The pictures are evocative, often resembling haunting impressionist paintings.
The Deepwater Horizon disaster occurred nearly four years ago, and the recovery and restoration processes in the Gulf of Mexico region are ongoing. The environmental, social, and economic impacts on the region are massive and enduring. But across the country and the world, the disaster and its aftermath have largely receded from current attention.
Although huge swaths of oil no longer coat the Gulf of Mexico and beaches of the Gulf coast, oil still is present four years later in some areas, and the long-term effects of the Deepwater Horizon spill will continue to be felt for years and decades to come. The Environmental Law Institute (ELI), through our publications, workshops, and social media outreach (Facebook, Twitter), aims to shine a spotlight on the ongoing impacts and the efforts to restore injuries and recover from harm. This blog will be another tool to stay abreast of Gulf issues. Among other things, we will highlight legal developments, economic and industry news related to the restoration process, and other relevant storylines.
Most of all, we aim to never forget the human story, and the environmental and economic realities faced by the people and communities that comprise the Gulf Coast.
Public Interest Law Fellow
Welcome to Ocean Talk
April 20, 2014
In 2006, we launched the Ocean Program at the Environmental Law Institute to tackle pressing ocean and coastal governance challenges. Through discussions and brainstorming sessions the team explored potential target topics, from addressing climate change impacts to exploring ecosystem-based management implementation, and even the contentious (and critically important) issue of whether we would be the plural “Oceans Program” or the singular “Ocean Program.” With a small team of fantastic attorneys and research associates, we quickly moved beyond brainstorming and initiated research in several key areas, keeping our primary focus of making law work for people, places, and the planet.
Eight years later, the initiatives we began in 2006 continue to inform our efforts and serve as a starting point for new directions. In Alaska, we support the role of Alaska Natives in managing resources, In the Gulf of Mexico, we partner to train communities about the legal framework related to post-Deepwater Horizon restoration. In the Mid-Atlantic, we help state and federal decision-makers examine and strengthen legal frameworks for renewable energy development and marine spatial planning. Our research, analysis and training has taken us to places like Israel, to host a study session on ecosystem-based management for the offshore environment and Barbuda, to support local efforts to achieve sustainable fisheries with ocean zoning and improved regulations. The list goes on with our fabulous and growing team of law and policy experts.
We are fortunate to work on a diverse array of issues and be exposed to an incredible web of leaders, experts, and individuals while we do it. Through our Program we are continually inspired to tackle new issues and expand our reach to support healthy oceans and communities.
Today we begin a blog, Ocean Talk, as a tool to share salient issues, perspectives, and resources. We hope the entries will spur ideas and expand the ocean dialogue—and we’re always around to join.
Thanks for following. Ocean Talk is a product of the Environmental Law Institute Ocean Program.
We welcome thoughts, comments, and ideas for blog posts at firstname.lastname@example.org.