Verdict on 2010 Gulf Oil Spill: Gross Negligence

Published at 07:11PM - 08/09/14

BP has been found guilty in an American court of gross negligence and wilful misconduct after the Gulf oil spill of 2010. The accident cost the lives of eleven workers and was deemed to be the worst in American history.

The judgement will now be used to determine the compensation payments due from the company, which could cost upwards of several billion pounds to affected parties. BP has already earmarked around £26 billion in order to cover the costs of the ongoing clean-up effort, legal settlements and regulatory fines.

Negligence Shared

Judge Carl Barbier from New Orleans also extended a ruling of negligence to BP’s sub-contractors, Halliburton and Transocean.

Judge Barbier determined that BP would be expected to take 67pc of the blame, with Halliburton responsible for 3pc, and Transocean responsible for the remaining 30pc. He warned that the company would be subject to enhanced civil penalties.

This court ruling could now increase the civil penalties levied on BP by 400pc, taking the penalty payment total alone to $18 billion USD. A ruling of negligence would have forced BP to pay $1,100 per spilt oil barrel. However, the ruling of gross negligence increases the financial burden significantly to $4,300 a barrel.

BP Fights Back

BP issued a statement in response to the ruling, saying that it was in strong disagreement with the court’s findings and that it intended to submit an appeal to a more senior court for a lesser penalty. The company said that the proof of gross negligence required a particularly high bar and burden of proof, which was not found in this case.

Criminal Liability

The company had already accepted criminal liability for the oil spill disaster in 2012 and had agreed to pay the US government $4.5 billion USD, which would effectively have settled its liability. However, subsequent legal developments have looked at the civil penalties due from the company, both to individuals and businesses impacted by the disaster, as well as to cover the costs of the ongoing clean-up operation. In the same year, the company also reached civil settlements of $9.2 billion and put a further $20 billion USD into trust arrangements to cover further payments to affected parties.

The legal proceedings went further after the company complained of being obliged to pay compensation to parties who hadn’t been directly impacted by the spill, and the effect of Judge Barbier’s ruling this week may have further repercussions for these settlement-fund obligations.

Further Considerations

Additionally, the total number of spilled oil barrels needs to be resolved, as well as the figure for the final civil penalty. A date for determining both factors is yet to be agreed. However, American government officials believe that the amount of spilled oil is likely to be around 4.2 million barrels. BP, however, have stated that they believe the figure to be 2.45 million.

BP said in April that it had concluded a period of active clean-up operations along the Louisiana coast. Following the judgement, shares in the company dropped by 6pc.

Last updated on 07:34PM - 09/09/14