CORRECTED - BP goes on trial for biggest U.S. oil spill

(Corrects headline to clarify company on trial not BP executives)

By Kristen Hays

NEW ORLEANS (Reuters) - People, businesses and governments harmed in the biggest oil spill in U.S. history got their day in court on Monday, blaming BP executives for the Deepwater Horizon disaster that killed 11 rig workers and spilled millions of barrels of oil into the Gulf of Mexico in 2010.

"The primary fault for this disaster lies with BP," Assistant U.S. Attorney Mike Underhill said at the start of the trial over legal culpability for the disaster that killed 11 oil workers and sent more than 4 million barrels of oil into the Gulf. The trial at the federal district court in New Orleans will be overseen by Judge Carl Barbier with no jury.

Lawyers for other plaintiffs also slammed executives for BP Plc (BP.L), as did an attorney for one of BP's codefendants. BP lawyers were scheduled to speak later in the afternoon, and must show that the company's mistakes do not meet the legal definition of gross negligence required for the highest amount of damages. BP has already spent or committed $37 billion on cleanup, restoration, payouts, settlements and fines.

Potential liabilities stretch into the tens of billions of dollars if Barbier determines BP or the other defendants were grossly negligent. Oil came ashore from Texas to Florida, threatening livelihoods and state economies dependent on seafood and tourism, so the list of plaintiffs is long.

Most observers still expect the case to be settled before the trial results in a verdict.

Underhill said that less than an hour before BP's long-troublesome Macondo well ruptured and caused an explosion, BP's top well site leader on the rig called an engineer in Houston to discuss a critical pressure test that indicated problems.

Company officials did not stop the operation and "11 souls had 47 minutes to live the rest of their lives," Underhill said in his opening arguments after a weekend of talks produced no last-minute settlement.

Underhill said the accident could have been avoided if onshore engineer Mark Hafle and well site leader Don Vidrine on the rig had done their jobs. Vidrine also faces criminal charges in the disaster, as does Robert Kaluza, the other highest-ranking supervisor aboard the rig before the disaster.

Jim Roy, an attorney for other plaintiffs suing well owner BP Plc (BP.L), rig owner Transocean Ltd (RIG.N), cement services provider Halliburton Co (HAL.N) and others, said BP executives at the highest level felt pressure to push output to the limit.

"Production over protection. Profits over safety," said Roy, who represents plaintiffs who did not take part in an $8.5 billion settlement BP struck last year.

Roy also said Transocean opened the door to disaster with poor staff training and poor maintenance of seabed equipment, while Halliburton made substandard cement to plug the well.

Transocean's lawyer Brad Brian also came out swinging against BP, saying rig workers trusted the oil company and died betrayed.

Brian said the inaction following the phone call showed Hafle and Vidrine did what they and others at BP had been doing for two months in the face of a risky well: "They did nothing."

He said Hafle spoke for eight minutes with Vidrine, discussed drillpipe pressure and improper alignment of a critical hose, hung up, "and then stayed safely onshore."


Barbier, the judge overseeing the trial, has deep roots in the Gulf Coast. Born in New Orleans in 1944, he attended Southeastern Louisiana University and Loyola University New Orleans School of Law. He was a lawyer in private practice for many years in New Orleans before President Bill Clinton tapped him for the federal bench in 1998.

The judge, who has also handled several high-profile cases stemming from Hurricane Katrina, postponed the trial date by more than a month. An army of media have descended on New Orleans to cover the trial, and the delay avoided a clash with the NFL Super Bowl in New Orleans on February 3 or the city's Mardi Gras festival on February 12.

The trial's first phase focuses on how much each company is to blame and the degree of negligence.

"BP is in a very tight bind," said Blaine LeCesne, a professor at Loyola University College of Law in New Orleans. "I never thought that they intended to try this case and really cannot afford to do so because the exposure is too potentially catastrophic."

Luther Strange, Alabama's attorney general, said he would seek to prove that BP, Transocean, Halliburton all acted with "gross negligence and willful misconduct."

"For that reason, we will ask the court at the end of this trial to rule that all three - BP, Transocean, and Halliburton - are liable for punitive damages to the state of Alabama," Strange said.

Simple negligence involves mistakes. Gross negligence involves reckless or willful disregard for human and environmental safety and is difficult to prove, experts say.

Those suing the companies say BP was grossly negligent, which the company denies.

"Less than 30 miles from the door of this courthouse, over 212 miles of Louisiana coast are being polluted and continue to be oiled. We continue to be adversely affected," Louisiana Attorney General Buddy Caldwell told the judge on Monday. "They acted in a grossly negligent manner."

Any punitive damages against BP would come on top of the potentially billions in fines under the Clean Water Act. The payout by BP so far included a record $4.5 billion in penalties, and a guilty plea to 14 criminal counts to resolve charges from the Justice Department and civil claims from the U.S. Securities and Exchange Commission.

BP has sold assets to help cover its spill-related costs, including its older, smaller Gulf of Mexico operations.

The second phase of the trial, expected to start in September, will focus on the flow rate of the oil that spewed from the well. The third phase in 2014 will consider damages.

(Reporting by Kristen Hays, with writing by Braden Reddall; editing by Patricia Kranz, John Wallace and David Gregorio)

Updated Date: Feb 26, 2013 02:49 AM

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