A US court ruling that dramatically ramped up BP’s potential penalties for the 2010 Gulf oil spill could create new liability risks not just for deep-water drillers but also for other industries, such as mining and nuclear power generation.
US District Judge Carl Barbier last week found that BP was guilty of “gross negligence” ahead of the rig explosion in the Gulf of Mexico. The April 20, 2010 blast killed 11 workers and spewed millions of barrels of oil for nearly three months.
The gross negligence designation could quadruple BP’s federal financial penalties, adding as much as $18 billion (R192bn) to the bill for the environmental disaster.
BP said it would appeal against the decision, arguing that “the law is clear that proving gross negligence is a very high bar that was not met in this case”.
Experts said if Barbier’s interpretation was upheld and adopted by other courts, it might leave a range of industries more exposed to potentially greater penalties.
“Other regulated industries are also going to be looking at what are the standards that courts are going to impose on their actions,” said Jessica Owley, an environmental law expert at State University of New York Buffalo Law School.
These included activities that might accidentally pollute waterways or cause environmental harm, such as nuclear power, fracking and paper processing, Owley and other legal experts said. These businesses might also be subject to penalties under federal statutes such as the Clean Water Act and the Oil Pollution Act.
The ruling is a long way from setting a wide-ranging legal precedent. The case could drag on for years, ultimately landing before the US Supreme Court.
In reaching his finding of gross negligence, Barbier said that BP employees misread a safety test and that the firm was responsible for their actions. He listed a series of what he described as negligent acts, including mistakes in drilling the final 30m of the Macondo well. All these acts together, he said, constituted a “conscious disregard of known risks”.
Legal experts said under this definition, firms would have to be more careful about numerous everyday safety decisions that could add up to gross negligence if they resulted in a disaster of a similar scale.
“It’s sort of like if the cops stop me once, it’s only a misdemeanour. But if the cops stop me enough times, a misdemeanour turns into felony,” said Blaine LeCesne, a civil procedure professor at the Loyola University College of Law. “If that holds, that is a seismic development in tort law.”
Under the US Clean Water Act, fines for gross negligence can be up to $4 300 a barrel of oil spilled, almost quadruple the limit on an act of simple “negligence” of $1 100 a barrel. In other industries, judges and regulators may also weigh the degree of negligence when considering civil penalties.
Barbier’s ruling said the inherent risks in deep-water drilling required a higher standard of care in this industry because of the huge potential harm.
Stephen Colville, the president of the International Association of Drilling Contractors, declined to comment on the BP ruling but said firms had been tightening up safety practices in the wake of the Deepwater Horizon spill.
But outside observers said the ruling posed new challenges. “It sends a very cautionary message to the oil industry,” said Joseph Lavitt, an expert on insurance law at the University of California, Berkeley. – Reuters