While the energy company BP has long maintained it was not primarily responsible for the largest oil spill in US history — the Deepwater Horizon blowout in 2010 in the Gulf of Mexico — US district court judge Carl Barbier determined otherwise in a 153-page decision released on Thursday. As reported on 4 Sept 2014 by Campbell Robertson and Clifford Krause of the NY Times, BP may now be fined “$18 billion in new civil penalties . . . , nearly quadruple the maximum Clean Water Act penalty for simple negligence and far more than the $3.5 billion the company has set aside.”
The decision, likely to be appealed by BP, is the latest chapter in the story of the oil spill that sent tens of millions of gallons pouring into the Gulf and killed 11 workers on the drilling rig when it exploded. It also illustrates the process by which shared responsibility is determined among the various companies performing work on the drilling operation.
NEW ORLEANS — In the four years since the blowout on the Deepwater Horizon oil rig killed 11 workers and sent millions of barrels of oil gushing into the Gulf of Mexico, BP has spent more than $28 billion on damage claims and cleanup costs, pleaded guilty to criminal charges and emerged a shrunken giant.
But through it all, the company has maintained that it was not chiefly responsible for the accident, and that its contractors in the operation, Halliburton and Transocean, should shoulder as much, if not more, of the blame.
On Thursday, a federal judge here for the first time bluntly rejected those arguments, finding that BP was indeed the primary culprit and that only it had acted with “conscious disregard of known risks.” He added that BP’s “conduct was reckless.”
By finding that BP was, in legal parlance, grossly negligent in the disaster, and not merely negligent, United States District Court Judge Carl J. Barbier opened the possibility of $18 billion in new civil penalties for BP, nearly quadruple the maximum Clean Water Act penalty for simple negligence and far more than the $3.5 billion the company has set aside.
The ruling stands as a milestone in environmental law given that this was the biggest offshore oil spill in American history, legal experts said, and serves as a warning for the oil companies that continue to drill in the deep waters of the Gulf of Mexico, where high pressures and temperatures in the wells test the most modern drilling technologies.
“We are pleased,” United States Attorney General Eric H. Holder Jr. said of the ruling. “The court’s finding will ensure that the company is held fully accountable for its recklessness.”
The decision also casts a cloud over BP’s future. Its reputation has already been sullied and important holdings in Russia are at risk because of tensions in Ukraine. In addition to the $28 billion in claim payments and cleanup costs it has paid, BP has been forced to divest itself of more than 10 percent of its oil and gas reserves, along with valuable pipelines and refining facilities to pay claims and increase its profitability. BP shares fell by nearly 6 percent Thursday, closing at $44.89.In a statement, BP said it “strongly disagrees with the decision” and would immediately appeal to the United States Court of Appeals for the Fifth Circuit. BP added that the ruling was “not supported by the evidence at trial,” and that “the law is clear that proving gross negligence is a very high bar that was not met in this case.”
In a toughly worded 153-page decision, Judge Barbier reconstructed the timeline from the risky decision to drill more deeply before stopping to the hellish final minutes of hissing gas and raining mud, concluding with the deadly fireball that erupted on the night of April 20, 2010.
The hasty effort to temporarily shut down a drilling operation that was over budget and behind schedule led to what Judge Barbier called “a chain of failures” culminating in the explosion and spill.
Vital seals and stoppers were left leaky along the casing of the well, the judge found, while BP then skimped on tests that might have shown the problems caused by the shoddy work. When tests were run, the results were interpreted with optimism at best and dishonesty at worst, and several critical decisions made by BP were found by Judge Barbier to have been “primarily driven by a desire to save time and money, rather than ensuring that the well was secure.”
In a central episode, Judge Barbier highlighted a phone call between a senior BP employee on the rig and an engineer in Houston that took place roughly 40 minutes before the explosion. In the call, the two men discussed the results of a pressure test that should have prompted quick action to prevent an impending blowout. BP did not mention this call in its own investigative report, an omission Judge Barbier found suspicious.
While acknowledging responsibility for the accident, BP had long argued that the blame should be fully shared with Transocean, the owner of the Deepwater Horizon oil rig, and Halliburton, a contractor that oversaw a critical step in closing up the well.
While Judge Barbier did find the other companies had acted with negligence, he concluded that only BP, which leased the well and was in charge of the operation, was grossly negligent. He apportioned 67 percent of the blame for the spill to BP, 30 percent to Transocean and 3 percent to Halliburton.
“Transocean’s failures,” the judge wrote at one point, “largely concern its inability (due in part to further failures by BP) to stop the catastrophe BP set in motion.”
BP has already pleaded guilty to manslaughter and other charges and agreed to pay $4 billion in federal criminal penalties. But the company’s ultimate civil liability is far from determined.
In 2012, BP reached a settlement with many of the individual and business plaintiffs but has battled in court over interpretations of that settlement ever since. Last month the company requested that the United States Supreme Court support its reading of the settlement after a federal appeals court rejected that argument in May.
The leaders of a group of lawyers representing the damage claimants, James P. Roy and Stephen J. Herman, reacted to Thursday’s ruling in a statement, saying, “The court has now laid bare the full extent of the level of BP’s misconduct.”
Officials from states along the gulf welcomed Thursday’s decision as ammunition for their own separate damage lawsuits.
“Armed with this finding,” Alabama’s attorney general, Luther Strange, said in a statement, “Alabama is preparing to prosecute its case for compensatory and punitive damages against BP.”
The ruling only pertains to the first phase of a federal civil trial, concerning the responsibility of the blowout itself. Judge Barbier still must rule on how much oil was spilled in the accident, the subject of a trial that took place in the fall of last year. A third phase, scheduled to start in January, will lead to a final determination of penalties under the Clean Water Act.
This week Halliburton reached a $1.1 billion settlement with individual and business plaintiffs. Last year, Transocean agreed to pay $1.4 billion to settle federal criminal and civil charges, which is likely to cover most of its liability.
Legal scholars said BP faced an uphill struggle in the appeals process.
David M. Uhlmann, a law professor at the University of Michigan, who headed the environmental crimes section of the Justice Department from 2000 to 2007, highlighted the judge’s decision that “the government did not need to show BP was aware of the risks associated with its conduct” to be found grossly negligent.
But the judge went on to say, Mr. Uhlmann said, that “even if they had to show awareness of risk, the government had satisfied that burden.”