In a 153-page ruling issued last week, federal district judge Carl Barbier ruled that “gross negligence” by BP PLC was a major contributing factor to the April 2010 Deepwater Horizon oil spill in the Gulf of Mexico. BP repeatedly cut corners to reduce costs, evincing “an extreme deviation from the standard of care and a conscious disregard of known risks.” The judge placed particular emphasis on BP’s decision to leave debris in the bottom of the well that clogged a critical valve and the failure of BP workers to believe that a negative pressure test showed gas seeping into the well. BP argues that the evidence does not support the judge's ruling, which it will appeal.
The decision was the product of the first part of a three-part civil trial that is being held in federal district court in New Orleans. Lawsuits brought by the U.S. government, five Gulf coast states, and private parties have been consolidated and are being tried together. The finding of gross negligence means that civil penalties of $4,300/barrel of oil spilled, or up to approximately $18 billion, could be imposed on BP. Judge Barbier found that BP was responsible for 67% of the liability, Transocean Ltd (the owner of the oil rig) for 30% and Halliburton (which performed the cement work on the well) for 3%.
Although the finding of gross negligence should not surprise anyone who has followed the case closely, BP’s stock price plunged nearly 6%, apparently because the company has set aside only $3.51 billion for Clean Water Act penalties, an amount that will have to be increased dramatically. Judge Barbier is expected to rule next on the amount of oil that was spilled. BP claims that it is responsible for only 2.45 million barrels of oil spilled, while the government maintains that it is liable for 4.2 million barrels. This was the focus of the second phase of the trial, which was concluded last fall. The third phase of the trial, to set the actual penalty, will commence in January. Just days before Judge Barbier’s ruling, Halliburton agreed to pay the plaintiffs $1.1 billion to settle claims against it.
Last week a plan to dispose of 3 million cubic meters of dredged soil near Australia’s Great Barrier Reef was dropped in the face of intense public opposition. Australian environment minister Greg Hunt instead invited the consortium planning to expand the Abbott Point port to increase coal exports to revise their plan to provide for onshore disposal of the dredged spoil. Jamie Smyth, Dumping Plan for Barrier Reef Halter, Financial Times, Sept. 3, 2014, at 6.
The government of India has asked the country’s Supreme Court to modify its ruling declaring more than 200 coal mining licenses to be illegal. The government argued that 40 license holders already producing coal and six that are close to beginning production should not have their licenses cancelled. This is the latest in a long-running “coal scam” scandal involving coal rights dating back to 1993.
September 3rd marked the 50th anniversary of President Lyndon Johnson signing into law the Wilderness Act and the legislation creating the Land and Water Conservation Fund. In an editorial the New York Times criticized Congress for enacting only two pieces of wilderness legislation during President Obama’s terms (compared to 43 during President Reagan’s). The editorial noted that only a third of the $900 million authorized annually for the Land and Water Conservation Fund is likely to appropriated, even though the fund is supposed to received dedicated royalties from offshore oil leasing. “Still Time for a Conservation Legacy,” N.Y. TImes, Sept. 2, 2014.