A federal judge ruled Thursday that BP was grossly negligent in causing the 2010 Gulf of Mexico oil spill, and now the company has to pay.
U.S. District Judge Carl Barbier found that BP acted with "gross negligence" in the oil spill that killed 11 rig workers and caused billions of dollars in damage to Gulf businesses. Bloomberg Businessweek reports that the precise dollar amount owed by BP as a result of this ruling isn't clear yet, but The Associated Press estimates the damage at $17.6 billion.
How does this new case relate to BP's past and future court woes?
Oil Company Reckless in Handling Spill
Judge Barbier's decision is the latest in a long string of legal battles BP has fought in federal court, with the oil company being handed mostly losses. This ruling focused particularly on BP's liability for the Gulf spill under the Clean Water Act of 1977 (CWA).
Among other things, in the event of an oil spill, the CWA allows the responsible party to be fined "$25,000 per day of violation or an amount up to $1,000 per barrel of oil or unit of reportable quantity of hazardous substances discharged." However, in the event that the spill was the result of "gross negligence," that penalty increases to a minimum of $100,000 and "not more than $3,000 per barrel of oil" spilled. Both of these penalty schemes have been increased under federal regulations, to $1,100 (the default level) and $4,300 (for gross negligence).
Since the AP notes that anywhere between 2.4 and 4.1 million barrels were estimated to have been spilled, this means BP could owe anywhere between $10 and $18 billion in civil fines as a result of Thursday's ruling. Judge Barbier ruled that since BP acted recklessly, its conduct qualified as at least "gross negligence" under the statute, since reckless conduct is synonymous or at least as serious as gross negligence.
Past and Future Appeals
Because of the massive liability that this decision creates, BP has vowed that it will appeal Judge Barbier's ruling to the 5th U.S. Circuit Court of Appeals. And it won't be the company's first time before the 5th Circuit: After fighting and losing their right to avoid paying Gulf business owners under a settlement agreement, BP has appealed the 5th Circuit's numerous rulings to the U.S. Supreme Court.
- BP, court trade barbs after sharply worded oil spill ruling (CNBC)
- BP to Plead Guilty in Oil Spill Case; Civil Settlement Pending (FindLaw's Decided)
- BP Contests Oil Spill Settlement, Fearing 'Fictional Losses' (FindLaw's U.S. Fifth Circuit Blog)
- BP Petitions Supreme Court for Review of Oil-Spill Settlement (FindLaw's U.S. Fifth Circuit Blog)