Ruling against BP could mean $18 billion in fines
MICHAEL KUNZELMAN AND JANET MCCONNAUGHEY| ASSOCIATED PRESS
Septebember 4, 2014
NEW ORLEANS — BP could be looking at close to $18 billion in additional fines over the nation’s worst offshore oil spill after a federal judge ruled Thursday that the company acted with “gross negligence” in the 2010 Gulf of Mexico disaster.
U.S. District Judge Carl Barbier concluded that the London-based oil giant showed a “conscious disregard of known risks” during the drilling operation and bears most of the responsibility for the blowout that killed 11 rig workers and spewed millions of gallons of oil over three months.
In the next stage of the case, set to begin in January, the judge will decide precisely how much BP must pay.
Under the federal Clean Water Act, a polluter can be forced to pay a maximum of $1,100 in civil fines per barrel of spilled oil, or up to $4,300 per barrel if the company is found grossly negligent. Barbier’s finding exposes BP to the much higher amount.
Even as the oil giant vowed to appeal, BP stock fell $2.82, or nearly 6 percent, to $44.89, reducing the company’s market value by almost $9 billion.
“Everybody talks about how big they are, but it’s staggering,” David Uhlmann, a University of Michigan law professor and former chief of the Justice Department’s environmental crimes section, said of the pricetag for the spill.
BP previously agreed to pay a record $4 billion in criminal fines and penalties over the Deepwater Horizon disaster, plus more than $27 billion in cleanup costs and compensation to people and businesses harmed by the spill.
The company made $24 billion in profits last year but could be forced again to sell off some assets to cover the additional fines, analysts said.
Attorney General Eric Holder said Barbier’s ruling “will ensure that the company is held fully accountable for its recklessness” and will “serve as a strong deterrent to anyone tempted to sacrifice safety and the environment in the pursuit of profit.”
Barbier held a non-jury trial last year to identify the blowout’s causes and apportion blame for the disaster, and on Thursday he ruled that BP bears 67 percent of the responsibility, Swiss-based drilling rig owner Transocean Ltd. 30 percent, and Houston-based cement contractor Halliburton Energy Services 3 percent.
BP made “profit-driven decisions” during the drilling that led to the blowout, the judge concluded in his 153-page ruling. “These instances of negligence, taken together, evince an extreme deviation from the standard of care and a conscious disregard of known risks,” he wrote.
Among other things, the judge cited a misinterpreted safety test that should have warned the drilling crew that the well was in danger of blowing out.
In a statement, BP said the evidence did not meet the “very high bar” to prove gross negligence.
James Roy and Stephen Herman, who represented oil spill victims in the trial, said: “We hope that today’s judgment will bring some measure of closure to the families of the 11 men who tragically lost their lives, and to the thousands of people and businesses still trying to recover from the spill.”
Government experts estimated 4.2 million barrels, or 176 million gallons, spilled into the Gulf. BP urged the judge to use an estimate of 2.45 million barrels, or nearly 103 million gallons, in calculating any Clean Water Act penalties. Barbier hasn’t ruled yet on how much oil spilled.
If he goes with the government’s estimate, BP could be hit with close to $18 billion in fines.
The crude that gushed from the sea floor killed wildlife, stained beaches and polluted marshes. BP ultimately sealed the well after several methods failed.
BP pleaded guilty in 2013 to manslaughter in the rig workers’ deaths. Two BP supervisors aboard the rig are awaiting trial on federal manslaughter charges.
Darlene Kimball, who runs Kimball’s Seafood on the docks in Pass Christian, Mississippi, said she hopes Thursday’s ruling, and the likelihood of huge penalties, will prompt all oil companies to pay more attention to safety.
“Sometimes something has to happen for people to realize, ‘I don’t want that to happen with our company. Let’s go back and look at how we are doing things,’” she said.
BP faces still another set of potential penalties, under the federal Oil Pollution Act of 1990. Uhlmann said those claims could cost BP more than $10 billion. He said those claims could be difficult to resolve because of varying assessments of how much damage was done to the environment.
“We may not know for years how badly the Gulf of Mexico and its shorelines were damaged by the spill,” he said.
Kunzelman reported from Baton Rouge, Louisiana. Associated Press writer Holbrook Mohr in Jackson, Mississippi, contributed to this report.