BP Found Grossly Negligent in 2010 Spill, Fines May Rise by Margaret Cronin, September 4, 2014, Fisk and Laurel Brubaker Calkins
BP Plc (BP/) acted with gross negligence in setting off the biggest offshore oil spill in U.S. history, a federal judge ruled, handing down a long-awaited decision that may force the energy company to pay billions of dollars more for the 2010 Gulf of Mexico disaster.
U.S. District Judge Carl Barbier held a trial without a jury over who was at fault for the environmental catastrophe, which killed 11 people and spewed oil for almost three months into waters that touch the shores of five states. The case also included Transocean Ltd. (RIG) and Halliburton Co. (HAL), though the judge didn’t find them as responsible for the spill as BP.
“BP’s conduct was reckless,” Barbier wrote in a decision today in New Orleans federal court. “Transocean’s conduct was negligent. Halliburton’s conduct was negligent.”
Barbier apportioned fault at 67 percent for BP, 30 percent for Transocean and 3 percent for Halliburton. BP shares fell as much as 5.3 percent.
The ruling marks a turning point in the legal morass surrounding the causes and impact of the disaster. Four years of debate and legal testimony have centered on who was at fault and how much blame each company should carry.
The coalition of plaintiffs included the federal government, five Gulf of Mexico states, banks, restaurants, fishermen and a host of others who have pursued redress for their losses. While today’s ruling provides a partial answer, appeals may mean it will be years before final penalties are settled.
BP, which may face fines of as much as $18 billion, has set aside $3.5 billion to cover those penalties. The company had taken a $43 billion charge to cover all the costs related to the spill, according to a July 29 earnings statement. The ultimate cost is “subject to significant uncertainty,” BP said.
Barbier has yet to rule on how much oil was spilled, a key factor in determining the extent of BP’s liability. [Is that why Doug Suttles, now CEO of Encana, lied about the extent of the spill?]
The decision nevertheless may expose BP to unspecified punitive damages for claimants who weren’t part of the $9.2 billion settlement the company reached with most non-government plaintiffs in 2012. The judge left that unclear in his ruling.
“Although BP’s conduct warrants the imposition of punitive damages under general maritime law, BP cannot be held liable for such damages under Fifth Circuit precedent,” he wrote, referring to the federal appellate jurisdiction including Louisiana.
In a footnote, however, Barbier said BP might be liable for punitive damages for other claims.
With only a ruling of negligence, Transocean escapes any such liability. Halliburton, which also won an earlier indemnity ruling, removed the threat of punitive damages by agreeing to a $1.1 billion settlement with most plaintiffs Sept. 2. …
The disaster entered the courts on two tracks — criminal and civil. [Where are the criminal charges against Encana for intentionally fracing a community’s drinking water supplies, the subsequent water reservoir explosion and serious injuries to Rosebud’s water manager, and contamination of groundwater used by citizens community wide?] In 2012, BP pleaded guilty to 14 federal counts, including manslaughter for the 11 deaths in the explosion of the Deepwater Horizon rig, and obstructing Congress as it probed the size of the spill.
The U.K.-based energy company also agreed to pay $4 billion to end the criminal case. Transocean last year pleaded guilty to a U.S. charge tied to the Clean Water Act, and agreed to pay $1.4 billion. A Halliburton unit last year pleaded guilty to one count of destroying evidence for failing to preserve computer models examining its cement job on the well after the explosion. Halliburton paid a $200,000 fine.
BP also agreed to pay $525 million to settle U.S. Securities and Exchange Commission claims that it misrepresented the size of the spill, misleading shareholders as to its potential liability.
[Refer also to:
Investors sue BP’s ex-CEO Tony Hayward and Doug Suttles, now Encana CEO; Encana chops executives, five senior managers gone including USA President Jeff Wojahn, who headed the unit when it was accused of collusion