Deepwater Horizon Update - The Civil Trial Phase

Now that Transocean has joined BP in having their guilty pleas to the criminal charges arising from the Deepwater Horizon explosion and fire approved by the federal court, we are about to enter the civil phase of the linked court proceedings. Anyone who remembers the "O.J." trials, knows that the outcome of one trial is not necessarily a good predictor of the outcome of the other. Having pled guilty, both corporations are constitutionally protected from double jeopardy. This will allow them to fully defend themselves against the Federal Government.

There are very complicated chains of responsibility involved. During the criminal phase, BP was presumed to be the "responsible party" once the rig sank, whereas Transocean was the "responsible party" while she was still afloat. Even that simple-looking division is fraught with challenges when one considers that all the deaths and injuries took place while the vessel was still afloat and might therefore be dumped in Transocean's lap, not BP's. So far, BP has been left holding the hot potato because of an indemnity clause in its contracts with its subcontractors, such as Transocean.

As Sherlock Holmes would have put it, what is interesting in this scenario is the dog that didn't bark, specifically Halliburton. Halliburton was also a subcontractor to BP and it was their nitrified cement that failed, allowing oil and gas into the well and up inside the production casing, past the blowout preventer, onto the drill floor of Transocean's drilling rig, the Deepwater Horizon. One might also note at this juncture, that as part of the settlement with the private sector plaintiffs, through the Plaintiff's Steering Committee, BP gave its rights to sue its subcontractors to those plaintiffs. So a very skilled set of trial lawyers now will have a chance to take a bite out of the traditional "Public Enemy #1", Halliburton.

And like the vultures they are, the various governments, federal, state, and local are counting on the gusher of money they expect to get in the civil trial phase. Too bad none of them have considered that there is within the law a mechanism to allow the federal government to take charge if the "responsible party" proves not up to the job by declaring a "Spill of National Significance" and appointment of a National Incident Commander, who will lead the federal government to the rescue using funds set aside over the past two decades into a dedicated trust fund, sort of like those Social Security "trust funds".

Who do you trust to win the civil phase? Stay tuned! The civil trial begins Feb. 25, 2013.