Vessels monitor a oil burn in the area of the Deepwater Horizon disaster on the Gulf of Mexico, Tuesday, July 13, 2010. BP officials have placed a containment cap over the leak in hopes that the flow of oil will be diminished. (AP Photo/Dave Martin)
President Barack Obama makes a statement after being briefed on the BP oil spill relief efforts in the Gulf Coast region, Friday, June 4, 2010, at Louis Armstrong International New Orleans Airport in Kenner, La. (AP Photo/Charles Dharapak)
Protesters gather outside of the BP offices in San Francisco on Wednesday, May 12, 2010 to demonstrate against the Gulf oil rig disaster. (AP Photo/Marcio Jose Sanchez)
This image from video provided by BP PLC early Sunday morning, June 13, 2010 shows oil continuing to pour out at the site of the Deepwater Horizon oil well in the Gulf of Mexico. The Coast Guard has demanded that BP step up its efforts to contain the oil gushing into the Gulf of Mexico by the end of the weekend, telling the British oil giant that its slow pace in stopping the spill is becoming increasingly alarming as the disaster fouled the coastline in ugly new ways Saturday. (AP Photo/BP PLC) NO SALES
This image from video provided by BP PLC early Sunday morning, June 20, 2010 shows oil continuing to gush millions of gallons a day, from the broken wellhead, at the site of the Deepwater Horizon oil well in the Gulf of Mexico. (AP Photo/BP PLC) NO SALES
GULF SHORES, AL - JUNE 08: Workers pick up oil patches and tar that washed up on the beach at Bon Secour National Wildlife Refuge from the Deepwater Horizon oil spill in the Gulf of Mexico on June 8, 2010 in Gulf Shores, Alabama. Early reports indicate that BP's latest plan to stem the flow of oil from the site of the Deepwater Horizon incident may be having some success. (Photo by Joe Raedle/Getty Images)
Oil floats in the Gulf of Mexico near Orange Beach, Alabama, U.S., on Friday, June 18, 2010. The BP Plc oil spill, which began when the leased Transocean Deepwater Horizon oil rig exploded on April 20, is gushing as much as 60,000 barrels of oil a day into the Gulf of Mexico, the government said. Photographer: Kari Goodnough/Bloomberg
Oil cleanup workers hired by BP pick up oil on the beach in Gulf Shores, Ala., Friday, July 2, 2010. Oil from the Deepwater Horizon incident is expected to come ashore over the July 4th weekend. (AP Photo/Dave Martin)
In this image taken from video provided by BP PLC at 18:17 CDT, a new containment cap, top, is lowered over the broken wellhead at the site of the Deepwater Horizon oil spill in the Gulf of Mexico, Monday, July 12, 2010. Deep-sea robots swarmed around BP's ruptured oil well Monday in a delicately choreographed effort to attach the tighter-fitting cap that could finally stop crude from gushing into the Gulf of Mexico nearly three months into the crisis. (AP Photo/BP PLC) NO SALES
This combo made from images taken from video provided by BP PLC shows oil flowing from two of three valves on the new 75-ton cap atop the site of the Deepwater Horizon oil spill in the Gulf of Mexico at 17:04 CDT Wednesday, July 14, 2010, left, and the top of the cap at 17:56 CDT on Thursday, July 15, minutes after the flow of oil was choked off. BP vice president Kent Wells said the oil stopped flowing into the water at 14:25 CDT after engineers gradually dialed back the amount of crude escaping through the last of three vents in the cap, an 18-foot-high metal stack of pipes and valves.(AP Photo/BP PLC) NO SALES
The view from an approaching helicopter shows the armada of drillships and other vessels surrounding the site of the blown out BP well in the Gulf of Mexico about 40 miles off the coast of Louisiana. Credit Brett Clanton / Chronicle
Oil gushes from a valve atop the failed blowout preventer (BOP) at the BP Deepwater Horizon oil spill site in the Gulf of Mexico off the coast of Louisiana, U.S., in an image captured by the Skandi remotely operated underwater vehicle (ROV) camera at 7:35 a.m. Central Standard Time (CST) on Tuesday, July 13, 2010. BP Plc installed a new cap on its leaking Gulf of Mexico oil well and will start testing today whether this will stop the gusher while work continues on a permanent plug. Source: BP Plc via Bloomberg
EDITOR'S NOTE: EDITORIAL USE ONLY. NO SALES.
GULF OF MEXICO, LA - JULY 27: (EDITORS NOTE: Distortion caused by heat.) Ships assist in clean up and containment near the source of the BP Deepwater Horizon oil spill July 27, 2010 in the Gulf of Mexico off the coast of Louisiana. Work continues to put a permanent plug on the well which has leaked an estimated three to five million barrels of oil. (Photo by Chris Graythen/Getty Images)
Hairdresser Karen Jackson wears a t-shirt that reads "We've been BPeed on!" on the front of the shirt and "Gulf Oil Disaster 2010-??" on the back Saturday, July 3, 2010, in Orange Beach, Ala. Jackson says she is worried about the effect the spill is having on her community and what will happen if local business continues to falter. "I would hate to have to leave this place. We love it here." She said her business is way off what it should be for the season, "down here we make all of our money in the summer," she says. Her husband's work as an electrician has dried up she says, so he has signed on to work cleanup for BP. ( Smiley N. Pool / Houston Chronicle )
A driver rolls down the highway with messages such as "$ave the Gulf Coa$t" and "Tony Hayward C.E. O of B.P. Give us out Live Back" while driving Sunday, June 27, 2010, in Pensacola, Florida. ( Smiley N. Pool / Houston Chronicle )
This still image from a live BP video feed shows a view from a submersible while checking the integrity of the well head on August 3, 2010 in the Gulf of Mexico. BP prepared Tuesday to plug the worst oil leak in history, although the Gulf of Mexico region will be counting the environmental and economic costs for years, perhaps decades, to come. Already delayed by a week due to Tropical Storm Bonnie, the long-awaited "static kill" was put off again at the last-minute when a leak was discovered on Monday in the cap that has been sealing the runaway well since July 15. US spill chief Thad Allen said the leak had been stopped overnight and that the operation to ram in heavy drilling fluids, known as mud, would commence as soon as "injectivity tests" had given the procedure the all-clear. AFP PHOTO / BP == RESTRICTED TO EDITORIAL USE / NO SALES / NO MARKETING / NO ADVERTISING CAMPAIGN == (Photo credit should read HO/AFP/Getty Images)(Photo Credit should Read /AFP/Getty Images)
In this image taken from video provided by BP PLC at 12:23 a.m. EDT, Saturday Sept. 4, 2010 Aug. 3, 2010 shows the blowout preventer that failed to stop oil from spewing into the Gulf of Mexico being raised to the surface. The blowout preventer wasn't expected to reach the surface until Saturday, at which point government investigators will take possession of it. (AP Photo/BP PLC) NO SALES
DAUPHIN ISLAND, AL. | JULY 4, 2010 : A cleanup worker, wearing a protective coverall and carrying a small scoop, punctuates an otherwise typical holiday beach scene as patrols the beach looking for tar balls on Independence Day. While exact numbers are elusive, tourist business along the Gulf Coast all reported feeling the sting of lost income from a noticeable dip in tourism this summer following the Deepwater Horizon spill.
GULF OF MEXICO | JUNE 26, 2010 : Streaks of oil are seen on the surface of the water near the site of the Deepwater Horizon spill in the Gulf of Mexico. The amount of oil spilled, and what happened to the oil remains in debate, but in August, the Department of Energy and United States Geological Survey announced, that it estimated a total of 4.9 million barrels of oil had been released from the BP Deepwater Horizon well.
GRAND ISLE, LA. | JULY 15, 2010 : Oil containment boom floats just off the pier as fishermen cast lines near the bridge leading to the island after sun sets on the first full day of fishing after a ban on sport fishing was lifted. Commercial fishing remained closed, but happy recreational fishermen flocked to the water on a beautiful evening. Most were BP contractors working on the cleanup. One was Bobby Walker of Houma, La., who said he had been coming to the island to fish for over 30 years and praised the great fishing and natural beauty of the island. "But who would have ever thought I would be here all summer working on the oil spill."
HOUSTON – A federal judge on Thursday ruled that BP’s oil spill in the Gulf of Mexico four years ago was the result of gross negligence or willful misconduct by the London oil company.
The decision could cost BP billions of dollars more in fines for fouling the ocean, though it could be years before legal battles over the spill are resolved, as BP plans to appeal. Investors erased as much as $9.4 billion from BP’s market value Thursday.
The 153-page ruling comes more than four years after a subsea well blowout triggered an explosion at BP’s leased Deepwater Horizon platform on April 20, 2010, killing 11 workers and sending millions of barrels of oil into the ocean, along with the drilling platform that sank a few days later.
It was the biggest oil spill in U.S. history, lasting 87 days and spreading across hundreds of miles of beach in Louisiana, Texas and surrounding states. It spurred thousands of lawsuits and billions in fines and cleanup costs for BP, Transocean and Halliburton.
U.S. District Judge Carl Barbier of New Orleans said in his ruling BP committed a series of negligent acts and omissions that resulted in the discharge of oil, including drilling a final 100 feet in the Macondo well “with little or no margin.”
A ruling of gross negligence is one of the key factors that could lead to the maximum penalty of Clean Water Act fines for BP, $18 billion, if Barbier later sides with U.S. prosecutors that 4.9 million barrels of oil spilled into the Gulf. Barbier has yet to rule on the amount of oil spilled, but could hand down a judgement at any time. BP made $23.5 billion in profit last year.
Barbier’s decision to slap BP with gross negligence, rather than simple negligence, means fines could rise to $4,300 per barrel, rather than the minimum $1,100 per barrel.
In a statement, U.S. Attorney General Eric Holder said the Department of Justice is pleased with the ruling.
“The court’s findings will ensure that the company is held fully accountable for its recklessness,” Holder said. “We are confident this decision will serve as a strong deterrent to anyone tempted to sacrifice safety and the environment in the pursuit of profit.”
Barbier, who was appointed by former President Bill Clinton, also said BP is “subject to enhanced civil penalties” under the Clean Water Act. He ruled that BP’s conduct was reckless while Transocean and Houston oil field service firm Halliburton, which provided cement for the Macondo well, were negligent.
In apportioning fault, Barbier said BP was 67 percent responsible for the spill, while the owner of the Deepwater Horizon, Transocean, is 30 percent responsible and Halliburton would take 3 percent of the fault.
A BP spokesman said the company “strongly disagrees” with the decision and plans to file an appeal immediately. The firm has set aside more than $42 billion to cover oil spill costs and has paid some $27 billion in fines and compensation already.
“BP believes the finding that it was grossly negligent” was not “supported by the evidence at trial,” a spokesman said in an emailed statement. “The law is clear that proving gross negligence is a very high bar that was not met in this case. BP believes that an impartial view of the record does not support the erroneous conclusion.”
The ruling comes two days after Halliburton settled with Gulf residents and businesses for $1.1 billion, a move that allowed it to sidestep liability it may have faced if Barbier ruled it was negligent. Halliburton had provided cement for the doomed Macondo well, which federal investigators later concluded was unstable.
In an emailed statement, Halliburton said it was “pleased” with Barbier’s decision that it wasn’t grossly negligent, which means “the Macondo case is essentially over for Halliburton.”
“The lack of a gross negligence finding against Halliburton should resolve all remaining punitive damages claims against the company,” Halliburton said.
A spokesman for Transocean said it’s “a favorable and welcome ruling for Transocean, its employees, and all offshore drilling contractors.”
“The court has again ratified the industry-standard allocation of liability between drilling contractors and the owners and operators of oil wells,” Transocean said.
BP had been in the process of temporarily abandoning the deep-water Macondo well in the Gulf when a subsurface reservoir kick of pressure forced fluids into the wellbore, eventually causing a blowout. The following explosion on the Deepwater Horizon should have triggered the platform’s blowout preventer on the ocean floor just above the well, but it didn’t, and the emergency device failed to plug up the gushing oil well.
The Deepwater Horizon rig, which went into service in 2001, had drilled about 50 wells in its lifespan in the Gulf. It sank to the bottom of the ocean days after the crude gusher began to flow.
Barbier ruled that BP was also negligent by pumping cement into the Macondo well without a successful stability test. He said that although the instability of the cement provided by Halliburton didn’t cause the oil spill, “it is another instance of BP proceeding in the face of a known risk and therefore lends further support to the conclusion that BP’s conduct was reckless.”
Barbier is scheduled to hold a final phase in the civil trial in January, to hear testimony on potential Clean Water Act penalties. BP said during the penalty phase it will attempt to show “its conduct merits a penalty that is less” than the maximum.
“The court has now laid bare the full extent of the level of BP’s misconduct,” said James Roy and Stephen Herman, lead attorneys for thousands of oil spill claimants. “We hope that today’s judgement will bring some measure of closure to the families of the eleven men who tragically lost their lives, and to the thousands of people and businesses still trying to recover from the spill.”
BP shares fell $2.33 in early trading Thursday to $45.38 on the New York Stock Exchange. Transocean shares rose 50 cents to $38.54. Halliburton shares dipped 11 cents to $67.47.
BP-Ruling by Houston Chronicle