New Orleans, Louisiana – United States district court judge Carl Barbier, an appointee of President Bill Clinton, ruled that British Petroleum (BP) was “grossly negligent” in the 2010 Gulf oil spill. The spill ended up releasing as many as 4.2 million barrels of raw petroleum into the sea before the oil well was successfully capped. It should be noted that BP maintains the number of barrels of crude released was 2.45 million. Regardless of amount spilled, the disaster was the worst oil spill in history and Judge Barbier ruled that BP’s lack of safeguards amounted to a level of negligence warranting harsher penalties.
In legalese, “gross negligence” increases the amount of civil penalties that can be assessed to BP by 400%. Prior to the trial, BP had allocated $3.5 billion of the $43 billion disaster recovery fund to handle civil penalties. The rest of the money covers cleanup costs and legal settlements. BP determined the $3.5 billion in civil penalties based on a formula that sets the fines per barrel of oil released at $1,100. The ruling of “gross negligence” increases the penalties to $4,300 per barrel meaning BP will need to have $18 billion in funds to cover civil penalties.
Understandably, Wall Street reacted negatively to news sending BP shares down by 6%. For their part, BP is going to appeal the ruling. Along with the ruling, the responsibility for the disaster has been determined to be 67% owned by BP. Their subcontractor firm Transocean was given 30% responsibility, and the remaining 3% share of the financial blame belongs to Halliburton for the cement company. The US government found BP criminally responsible for the incident which declaration allowed the government to shake down the petroleum firm for a cool $4.5 billion. The settlement also shields the company from any further criminal liability.