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October 23, 2014

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BP executive testifies at Gulf oil spill trial

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Charlie Riedel / AP

A dead sea turtle floats on a pool of oil from the Deepwater Horizon spill in Barataria Bay off the coast of Louisiana Monday, June, 7, 2010.

NEW ORLEANS — The first BP executive to testify at a trial spawned by the massive 2010 oil spill in the Gulf of Mexico took the stand Tuesday to testify.

Lamar McKay was president of BP America at the time of the disaster. He is the trial's second witness and is expected to be the highest-ranking BP official to testify in person. His appearance Tuesday followed testimony by a plaintiffs' expert who criticized BP's safety record.

This isn't the first time McKay has testified under oath about the spill. He appeared before Congress less than a month after the deadly rig explosion.

U.S. District Judge Carl Barbier is hearing the case without a jury. Barring a settlement, Barbier will decide how much more money BP and other companies owe for their roles in the disaster.

McKay's testimony at a civil trial to determine how much more BP and other companies should pay for the spill followed that of an expert witness for people and businesses suing the company. University of California-Berkeley engineering professor Robert Bea testified that BP PLC didn't implement a 2-year-old safety management program on the rig that exploded in the Gulf of Mexico in 2010.

"It's a classic failure of management and leadership in BP," said Bea, a former BP consultant who also investigated the 1989 Exxon Valdez spill and New Orleans levee breaches after Hurricane Katrina in 2005.

The London-based company has said its "Operating Management System" was designed to drive a rigorous and systematic approach to safety and risk management. During cross-examination by a BP lawyer, Bea said the company made "significant efforts" to improve safety management as early as 2003.

However, BP only implemented its new safety plan at just one of the seven rigs the company owned or leased in the Gulf at the time of the disaster.

Bea said it was "tragic" and "egregious" that BP didn't apply its own safety program to the Deepwater Horizon before the Macondo well blowout triggered the explosion that killed 11 workers and spawned the massive spill. Transocean owned the rig; BP leased it.

BP lawyer Mike Brock said the company allows contractors like Transocean to take the primary responsibility for the safety of rig operations as long as the contractor's safety system is compatible with BP's — an arrangement that Brock suggested is a standard industry practice.

As he questioned Bea, Brock also recited a long list of steps that BP took to improve safety, citing them as evidence that the company wasn't "cutting corners in the area of safety."

A plaintiffs' lawyer showed Bea a transcript of a deposition of Tony Hayward, who was BP's CEO at the time of the disaster. Hayward was asked if the deadly April 20, 2010, blowout could have been averted if BP had implemented the safety management program in the Gulf.

"There is possible potential," Hayward responded. "Undoubtedly."

Bea's testimony opened the second day of a civil trial that could result in BP and its partners being forced to pay billions of dollars more in damages. The case went to trial Monday after attempts to reach an 11th-hour settlement failed.

The second witness slated to appear was Lamar McKay, president of BP America at the time of the disaster. But it wasn't clear if there would be time for testimony late Tuesday from McKay, who became chief executive of BP's Upstream unit on Jan. 1. Other BP officials were expected to give videotaped testimony.

Bea said BP's "culture of every dollar counts" was reflected in a May 2009 email sent by BP well team leader John Guide: "The DW Horizon embraced every dollar matters since I arrived 18 months ago," Guide wrote. "We have saved BP millions and no one had to tell us."

In a report prepared for the trial, Bea concluded that BP's "process safety failures" were a cause of the blowout.

"Financially, BP had the resources to effectively put into place a process safety system that could have prevented the Macondo disaster," Bea testified.

Bea said he had warned BP management several years before the Gulf rig explosion that "culture is key" to the company's ability to operate safely. Bea said the company didn't heed his warnings.

In pretrial depositions and in a report, Bea argued along with another consultant that BP showed a disregard for safety throughout the company and was reckless — the same arguments made in opening statements Monday by attorneys for the U.S. government and individuals and businesses hurt by the spill.

Attorneys for BP tried to block Bea's testimony, accusing him of analyzing documents and evidence "spoon-fed" to him by plaintiffs lawyers. BP accused Bea and another expert, William Gale, a California-based fire and explosion investigator and consultant, of ignoring the "safety culture of the other parties" involved in the spill, including rig owner Transocean Ltd.

Gale does not appear on a list of potential witnesses.

Just last year, Bea testified for plaintiffs who sued the U.S. Army Corps of Engineers over broken levees in New Orleans following Hurricane Katrina.

In the BP case, U.S. Justice Department attorney Mike Underhill said Monday that the catastrophe resulted from the company's "culture of corporate recklessness."

"The evidence will show that BP put profits before people, profits before safety and profits before the environment," Underhill said. "Despite BP's attempts to shift the blame to other parties, by far the primary fault for this disaster belongs to BP."

Brock, the BP attorney, acknowledged Monday that the oil company made mistakes. But he accused Transocean of failing to properly maintain the rig's blowout preventer, which had a dead battery, and he claimed cement contractor Halliburton used a bad slurry" that failed to prevent oil and gas from traveling up the well.

BP has already pleaded guilty to manslaughter and other criminal charges and has racked up more than $24 billion in spill-related expenses, including cleanup costs, compensation for businesses and individuals, and $4 billion in criminal penalties.

One of the biggest questions facing Barbier, who is hearing the case without a jury, is whether BP acted with gross negligence.

Under the Clean Water Act, a polluter can be forced to pay a minimum of $1,100 per barrel of spilled oil; the fines nearly quadruple to about $4,300 a barrel for companies found grossly negligent, meaning BP could be on the hook for nearly $18 billion.

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