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The trial over the worst oil spill in American history began on Monday in New Orleans, with a slew of lawyers representing the government, businesses, contractors and individuals mostly trying to place the blame on BP for the Gulf Coast oil spill.

Federal prosecutors and plaintiffs’ lawyers argued the oil giant is guilty of gross negligence that caused the 2010 disaster that killed 11 rig workers and poured 4 million barrels worth of oil into the Gulf of Mexico.

"Not only was it within BP's power to prevent the tragedy, it was its responsibility," said Mike Underhill, a U.S. Justice Department trial attorney.

Underhill argued that less than an hour after the BP well erupted, the company’s head well site leader noticed a problem in a pressure test.  It was at that moment the well should have been shut off, Underhill argued, but it was not and instead exploded.

Judge Carl Barbier is overseeing the trial with no jury at the federal court in New Orleans.  BP must show its errors do not meet the legal definition of gross negligence.  The company has already paid $37 billion in cleanup, restoration, fines and settlements since the spill.

It is likely that a settlement will be reached outside the court room before a verdict is reached.

BP lawyer Mike Brock argued the company is not solely responsible for the environmental disaster. Instead, that responsibility is shared by rig owner, Transcocrean, and cement services provider, Halliburton.  

"There were a number of mistakes and errors in judgment that were made by BP, Transocean and Halliburton," Brock said.

Transocean lawyer Brad Brian said BP had betrayed the trust of the workers on the rig and cited emails in which BP employees referred to it as “the well from hell.”

Halliburton's lawyer, Don Godwin, equally went after BP, but added Transocean should have shut off the well when the troubling signs were initially noticed.

"Now is when they want to pass the buck and blame my client for their misdeeds," he said.

Jim Roy, an attorney representing some of the plantiffs suing the three companies and others, said companies involved shoulder the blame. He told the judge they were motivated by "Production over protection. Profits over safety,"

Oil reached the shores of all five Gulf Coast states, wreaking havoc on local economies dependent on tourism and seafood. For that reason, there is a long list of plantifs looking for monetary compensation for their losses.

Despite the cleanup effort, many communities along the coast say they are still feeling the impact from the April 2010 spill.

Monday marked the opening of the trials first phase, aimed at assessing how much each company is to blame and their degree of negligence.  Future trials will focus on the amount of oil that spilled from the well and the damages.

BP has denied gross negligence since the Deepwater Horizon oil rig explosion.

Reuters contributed to this report

U.S. Coast Guard via Reuters

Fire boats battle the blazing remnants of the oil rig Deepwater Horizon off Louisiana on April 21, 2010.

WASHINGTON - Transocean Ltd has agreed to pay $1.4 billion to settle U.S. government charges arising from BP Plc's massive 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

The settlement unveiled by the Department of Justice includes $1 billion in civil penalties and $400 million in criminal penalties. The company had set aside a total of $1.95 billion in potential losses related to the spill, including $1.5 billion for its anticipated settlement with the DoJ.

Shares of Transocean were up 7 percent at $49.50 on midday trading on the New York Stock Exchange. The Standard & Poor's 500 Index was up 0.1 percent.

"The bottom line to me is they now can put away the big black cloud that has been hanging over them," said Phil Weiss, an oil analyst at Argus. "I take this as a positive, even if the number is a little higher than I expected."

Switzerland-based Transocean owned the Deepwater Horizon rig that was drilling a mile-deep well when a surge of methane gas sparked an explosion on April 20, 2010. The explosion killed 11 men and led to one of the largest environmental disasters in U.S. history.

"This resolution of criminal allegations and civil claims against Transocean brings us one significant step closer to justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster," U.S. Attorney General Eric Holder said in a statement.

BP to pay $4.5 billion, plead guilty to manslaughter in Gulf of Mexico oil spill

BP and Transocean had "multiple safety management system deficiencies that contributed to the Macondo incident," and neither had adequate safety rules, according to a July 2012 report from the U.S. Chemical Safety Board.

Transocean and BP disagreed on who was in charge of interpreting what is known as a negative pressure test, which could have alerted workers to the well's instability.

BP in November agreed to a settlement with the U.S. government worth $4.5 billion, including the largest criminal fine ever at $1.256 billion. The London-based oil company also agreed to plead guilty to obstruction of Congress, a felony.

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Updated at 2:45 p.m. ET: BP will pay approximately $4.5 billion and plead guilty to manslaughter and other criminal charges as part of a settlement with the U.S. government over the deadly Deepwater Horizon rig explosion and massive oil spill in the Gulf of Mexico in 2010, the London-based oil giant and federal officials said Thursday.

The settlement total, to be paid out over five years, includes more than $1.25 billion in criminal fines -- the largest such penalty ever.

In addition, two BP employees have been indicted on manslaughter charges and a BP executive has been indicted on charges he lied to authorities about his work estimating the Gulf spill rate. 

At an afternoon news conference in New Orleans, U.S. Attorney General Eric Holder called the wide-ranging settlement "the latest step forward in our ongoing efforts to achieve justice for those whose lives and whose livelihoods were impacted by the largest environmental disaster in the history of the United States."

He said the settlement amounts mark "both the largest single criminal fine … and the largest total criminal resolution" in U.S. history.

BP has agreed to plead guilty to 11 counts of felony manslaughter, one count of felony obstruction of Congress and violations of the Clean Water and Migratory Bird Treaty Acts, Holder said.

The agreement, subject to court approval, resolves all federal criminal charges and all claims by the Securities and Exchange Commission against the company stemming from the explosion and leak, the largest accidental marine oil spill in history.

“All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region,” Bob Dudley, BP’s group chief executive, said in a statement announcing the settlement.

Lee Celano / Reuters, file

A hard hat from an oil worker lies in oil from the Deepwater Horizon oil spill on East Grand Terre Island, Louisiana in this June 8, 2010 photo.

“From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. We apologize for our role in the accident, and as today’s resolution with the U.S. government further reflects, we have accepted responsibility for our actions.”

“We believe this resolution is in the best interest of BP and its shareholders,” added Carl-Henric Svanberg, BP’s chairman. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”

In addition, a federal indictment unsealed Thursday charges David Rainey, who was BP's vice president of exploration for the Gulf of Mexico, with obstruction of Congress and making false statements. He is accused of lying to federal investigators when they asked him how he calculated a flow rate estimate for BP's blown-out well in the days after the disaster.

Two BP well site leaders, Robert Kaluza and Donald Vidrine, were indicted on manslaughter and involuntary charges, accused of disregarding abnormal high-pressure readings that should have glaring indications of trouble just before the deadly blowout.

Rainey's lawyer said his client did "absolutely nothing wrong." And attorneys for the two rig workers accused the Justice Department of making scapegoats out of them.   

"Bob was not an executive or high-level BP official. He was a dedicated rig worker who mourns his fallen co-workers every day," Kaluza attorneys Shaun Clarke and David Gerger said in a statement, The Associated Press reported. "No one should take any satisfaction in this indictment of an innocent man. This is not justice."

Before Thursday, the only person charged in the disaster was a former BP engineer who was arrested in April on obstruction of justice charges, according to AP. He was accused of deleting text messages about the company's response to the spill.

The Deepwater Horizon rig, 50 miles off the Louisiana coast, sank after the fiery explosion. The well on the sea floor spewed an estimated 206 million gallons of crude oil, soiling sensitive tidal estuaries and beaches, killing wildlife and shutting vast areas of the Gulf to commercial fishing.

After several attempts failed, engineers finally managed to cap the gushing well on July 15, 2010, halting the flow of oil into the Gulf after more than 85 days.

The spill exposed lax government oversight and led to a temporary ban on deepwater drilling while officials and the oil industry studied the risks, worked to make it safer and developed better disaster plans.

Thirteen of the 14 criminal charges to which BP plans to plead guilty pertain to the accident itself and stem from the negligent misinterpretation of a negative pressure test conducted on board the Deepwater Horizon, BP said. The company said it acknowledged this misinterpretation more than two years ago when it released its internal investigation report.

The remaining criminal count of obstruction pertains to allegations that company officials lied to Congress about how much oil was pouring out of the ruptured well during the spill response.

As part of its resolution of criminal claims with the U.S. government, BP will pay $4 billion in installments over five years and has also agreed to five years’ probation.

The amount includes about $1.25 billion in criminal fines, nearly $2.4 billion to be paid to the National Fish & Wildlife Foundation and $350 million to be paid to the National Academy of Sciences.

BP said it will also pay the SEC $525 million over three years to settle all securities claims.

The $1.25 criminal penalty is the largest in U.S. history, eclipsing the nearly $1.2 billion paid by Pfizer Inc. for marketing fraud related to its Bextra pain medicine in 2009, according to Bloomberg and AP.

BP has also agreed to take more steps to boost safety of drilling operations in the Gulf of Mexico, including third-party auditing and verification, training and well control equipment and processes such as blowout preventers and cementing.

Under U.S. law, companies convicted of certain criminal acts can be debarred from contracting with the federal government. BP says it has not been told of any intent by government agencies to suspend or debar the company in connection with the plea agreement.

Still pending is a separate civil court action in which the federal government contends BP was grossly negligent in causing the spill. “We’ve been in negotiations with BP. We have not reached a number that I consider satisfactory to resolve those claims that we have,” Holder said.

The criminal deal announced Thursday with the Justice Department is also separate from a March settlement in which BP agreed to pay $7.8 billion to more than 100,000 businesses and individuals who say they were harmed by the spill.

The Associated Press contributed to this report.

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U.S. Coast Guard via Reuters

The Deepwater Horizon oil rig burns on April 21, 2010. Eleven workers died and 4.9 million barrels of oil were spilled.

BP and the Obama administration have made progress toward a criminal and civil settlement over the 2010 Gulf of Mexico oil spill --narrowing their differences to $6 billion, the Wall Street Journal reported -- but Gulf Coast lawmakers from both parties are worried the terms will send most of the money to the federal government instead of the affected states.

"The Obama administration could be cutting a deal that allows BP to write off much of the fines as a tax deduction," Rep. Jo Bonner, R-Ala., said in a statement this week. "What’s more, the bulk of the penalty collected by the federal government would essentially be walled off from local control to be doled out as the administration sees fit."

The Journal, citing people familiar with the talks, reported Wednesday night that BP and the Justice Department are close to a broad deal but that a key obstacle is what degree of negligence, if any, should be attributed to BP. The more negligent, the higher the fines under the Clean Water Act.

Civil penalties under the act could range between $5.4 billion and $21 billion. One person familiar with the talks said that as of last month, the two sides were about $6 billion apart on a final settlement figure, the Journal reported.

The talks are separate from a March settlement whereby BP agreed to pay plaintiffs $7.8 billion for damages.

The Justice Department is weighing whether to levy fines not through the Clean Water Act but through a provision of the Oil Pollution Act that would allow BP to deduct the fines from corporate taxes, the Journal reported.

Moreover, funds in the Oil Pollution Act are controlled by the federal government, whereas Congress passed a law requiring that 80 percent of any BP fines via the Clean Water Act go to the five Gulf Coast states.

Louisiana could actually benefit from fines via the Oil Pollution Act, since those must go to environmental cleanup and Louisiana was the hardest hit state in terms of spill damage.

But seven House lawmakers from Alabama, Florida, Mississippi and Texas last week sent a letter to U.S. Attorney General Eric Holder saying they object to any deal "that disproportionately applies penalties" through the Oil Pollution Act.

Related: Oil sheen coming from Deepwater Horizon site

A similar letter was sent by eight Senators, including Louisiana's Mary Landrieu, a Democrat who co-sponsored the RESTORE Act requiring that 80 percent of any Clean Water Act fines go to the gulf states.

"Circumventing the will of Congress by short changing the RESTORE Act is wholly unacceptable to us," they wrote. 

An explosion aboard the Deepwater Horizon drilling rig on April 20, 2010, led to deaths of 11 workers and the worst oil spill in U.S. history -- 4.9 million barrels of oil.

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AP

The former Exxon Valdez is anchored some six miles off the coast of the Alang shipbreaking yard in India on June 30.

India's Supreme Court this week delivered a ruling that could drastically change the way international ships are dismantled, but in the process cleared the way for the destruction of the ship formerly known as the Exxon Valdez.

The symbol of America's worst oil tanker spill, the vessel is now the Oriental Nicety after a series of ownership changes since the 1989 disaster.

It's been anchored off India since May, when the court blocked it from being beached at the infamous Alang shipbreaking yard. Activists had sued, arguing that importing such ships for dismantling violated the U.N. Basel Convention, an international treaty on hazardous waste transport.

In its ruling Monday, the court acknowledged that violation, drawing praise from activists who want ships recycled using tougher health and environmental standards.

"Hopefully this ruling will be the beginning of the end of the dark ages of ship recycling," Jim Puckett, director of the Basel Action Network (BAN), said in a statement. "Hundreds of poor and desperate laborers have been killed or exposed to hazardous chemicals as a result of the disastrous shipbreaking practices on Indian beaches."

But activists were perplexed when the court exempted the Oriental Nicety.

"Oddly enough, the court acknowledged in its ruling that there may be toxic material in the Exxon Valdez that has not yet been discovered," Colby Self, director of BAN's Green Ship Recycling Campaign, told NBC News.

The court concluded any dangerous material would be "exposed only at the time of actual dismantling of the ship."

"It is made clear that if any toxic wastes embedded in the ship structure are discovered during its dismantling, the concerned authorities shall take immediate steps for their disposal at the cost of the owner," India's top judges wrote in their order, which was reported by The Hindu newspaper and other Indian news media.

Longer term, the question will be whether the broader ruling is enforced. 

Self voiced optimism but acknowledged that "political pressure is extremely high given the immediate economic impacts of this measure."

"The upcoming challenge is seeing that officials follow the court order," he said. One scenario, he noted, is that the local pollution control board might just issue a directive "to outwit the court's ruling."

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Waterkeeper Alliance says this image was taken on Dec. 30, 2011, and shows an oil sheen from the Taylor Energy platform that was destroyed by Hurricane Ivan in 2004.

Environmental groups on Thursday sued an oil company over the pace of its cleanup of a Gulf of Mexico spill that continues seven years after it was triggered by Hurricane Ivan in 2004.

"The plaintiffs filed suit to stop the spill and lift the veil of secrecy surrounding Taylor oil’s seven-year-long response and recovery operation," Marc Yaggi, executive director of Waterkeeper Alliance, said in a statement announcing the lawsuit, which was filed in federal court in New Orleans. "Neither the government nor Taylor will answer basic questions related to the spill response, citing privacy concerns."

Justin Bloom, a Waterkeeper Alliance director, told msnbc.com that the group had made Freedom of Information Act requests for documentation "and ultimately the Coast Guard has refused to provide us documents citing the Privacy Act."

The groups allege that Taylor Energy, based in New Orleans, has violated the Clean Water Act provisions that require public participation in any enforcement of the law.

"Without details about Taylor’s response to this crisis," the lawsuit states, "it is impossible for members of the public to assess the risk that similar events will cause additional multi-year spills, including spills from higher-pressure wells in deeper water."

Taylor Energy did not immediately return a msnbc.com call for comment, but it has acknoweldged the spill and has been working with the U.S. Coast Guard and federal Bureau of Ocean Energy Management to plug it.

Three containment domes had "substantially reduced" sheening over time, it stated on June 8, 2010, after the BP spill drew attention to the area.

The gulf is home to hundreds of oil wells and platforms, both active and capped, and some of which periodically leak. In addition, the gulf and other bodies of ocean regularly see natural oil seeps.

Waterkeeper said it estimates that hundreds of gallons of oil have been leaking from the Taylor site each day for the last seven years.

The Coast Guard, however, said the average amount of oil leaking from the site is 7.5 gallons per day. Oil sheens from the site have been "minimal" and have never made landfall, according to the Coast Guard, which says a total of 12,720 gallons of oil have been reported from daily observations since the spill started in 2004.

"The sheen size of a few gallons (in volume as observed over the sheen dimensional area) has been too thin of an oil film to warrant offshore recovery operations," the Coast Guard said in a statement.

The plaintiffs acknowledge that the spill is tiny next to the BP spill of 200 million gallons but, argued Bloom, the Taylor spill "is emblematic of a broken system, where oil production is prioritized over concerns for human health and the environment."

The Associated Press contributed to this report.

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