A U. S. District Court’s September 4, 2014 ruling could levy U. S. history’s highest Clean Water Act penalty for U. S. history’s worst oil spill, exposing BP PLC to as much as $18 Billion in civil penalties.
On April 20, 2010, an offshore oil drilling rig called Deepwater Horizon endured a blowout and explosion that killed 11 men, sank the rig and spewed millions of gallons of oil into the Gulf of Mexico for 87 days approximately 250 miles southeast of Houston, TX. This worst oil spill in U. S. history is a disaster of unusual breadth and complexity resulting in multiple criminal and civil actions that may require decades of legal wrangling.
The U. S. government acted against the responsible companies, alleging violations of the Clean Water Act. Transocean Ltd., the rig’s owner, agreed to pay $1.4 Billion for its violations. BP PLC, the oil company leasing the rig when it exploded, agreed to pay $2.4 Billion. Halliburton Energy Service, the company responsible for sealing the completed well, agreed to pay $1.1 Billion. Their agreements did not end the government’s pursuit of even higher penalties.
On September 4, 2014, Judge Carl Barbier of the U. S. District Court for the Eastern District of Louisiana completed the Phase I trial and allotted liability among the 3 companies, finding BP PLC 67% liable, Transocean Ltd 30% liable and Halliburton Energy Service 3% liable. Most painfully, the judge also ruled that BP was grossly negligent, which raises the Act’s civil penalties from the “normal” $1,100 per barrel spilled to nearly four times that amount. In his 153-page decision, the judge ruled that BP made “profit-driven decisions” and committed other negligent acts, collectively evincing “extreme deviation from the standard of care and a conscious disregard of known risks,” resulting in the devastating blowout.
The penalty phase of the trial, in which evidence is presented to help the judge determine the actual dollar amount, is scheduled for January 20, 2015. The government asserts that approximately 4.9 million barrels were spilled while BP maintains that about 3.7 million barrels were spilled. Given the penalty’s application on a “per barrel” basis and the nearly 4X penalty per barrel for gross negligence, the opposing views are $ Billions apart.
Faced with enhanced penalties as high as $18 Billion, BP vowed to appeal the decision. BP’s attorneys correctly state that the bar for finding “gross negligence” is very high. They assert the trial evidence did not rise to that level.
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