U.S. News


BP Found 'Grossly Negligent' In 2010 Oil Spill

A federal judge has declared BP's reckless actions led to the 2010 disaster in the Gulf of Mexico. The ruling could cost the company $18 billion.
Posted at 6:37 PM, Sep 04, 2014

A federal judge ruled Thursday oil and gas giant BP displayed "gross negligence" regarding the massive 2010 oil spill in the Gulf of Mexico. It's a ruling that could cost the company billions in fines.

Judge Carl Barbier ruled BP acted recklessly and ignored repeated warning signs while operating its Deepwater Horizon oil rig in the Gulf, actions which lead to the rig's explosion on April 20, 2010. The disaster killed 11 people and spilled over 4 billion barrels of oil into the Gulf, according to U.S. government estimates. (Video via U.S. Coast Guard)

Barbier divided blame for the disaster onto three of the companies involved: BP, Halliburton, and Transocean. The majority of the liability was put on BP's shoulders — Barbier found that while Halliburton and Transocean might have acted negligently, only BP acted recklessly.

Phrases like "reckless" and "gross negligence" are extremely damaging for BP because they increase the company's liability under the Clean Water Act. Normally, BP's fines would cap at $1,100 a barrel for simple negligence — but gross negligence almost quadruples that figure.

Thursday's ruling could cost BP up to $18 billion dollars, if the U.S. imposes the maximum penalty. BP has earmarked only $3.5 billion for Clean Water Act fees.

The company has strongly disagreed with the ruling, claiming Barbier's decision "is not supported by the evidence at trial" and vowing to appeal it.

It's worth noting BP hasn't shied away from responsibility for the spill — the company's most recent earnings report estimates the spill has cost the company $43 billion to date. But BP has also argued Halliburton and Transocean should bear a much greater share of the liability than Barbier assigned them.

Both Halliburton and Transocean have already agreed to $1 billion settlements over the catastrophe — which could help them avoid some potential fines. Halliburton's settlement came just two days before the ruling.

Thursday's decision was just the second part of a three-phase court battle over the oil spill. The third part, which begins in January, will decide the exact amount each company must pay.

This video contains images from Getty Images, U.S. Coast Guard.