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BP 'grossly negligent' in 2010 US spill

Friday, September 05 08:52:08

A U.S. judge has decided that BP Plc was "grossly negligent" and "reckless" in the Gulf of Mexico oil spill four years ago, a ruling that could add nearly $18 billion in fines to more than $42 billion in charges the company took for the worst offshore environmental disaster in U.S. history.

BP said it would appeal Thursday's ruling by U.S. District Judge Carl Barbier in New Orleans, Louisiana, who held a trial without a jury last year to determine who was responsible for the April 20, 2010 rig explosion and spill that killed 11 workers and spewed oil for nearly three months onto the shorelines of several states.

Barbier ruled that BP was mostly at fault and that two other companies in the case, Transocean Ltd and Halliburton , were not as much to blame. The disaster struck when a surge of methane gas known to rig hands as a "kick" sparked an explosion aboard the Deepwater Horizon rig as it was drilling the mile-deep Macondo 252 well off Louisiana.

Barbier has yet to assign damages from the spill under the federal Clean Water Act or rule on how many barrels spilled, but David Uhlmann, a University of Michigan law professor and former chief of the Justice Department's environmental crimes section, said the ruling "dramatically increases" BP's liability for civil penalties under the act.

Previous calculations by Reuters have shown fines could run to $17.6 billion in the costliest scenario under a 'gross negligence' finding. The amount is far more than the $4.5 billion maximum fine that could have been levied under a simple 'negligence' ruling.

BP has set aside only $3.5 billion for fines under the Clean Water Act, part of a much broader series of provisions for cleanup, compensation and damages that exceed $42 billion.

"The Court concludes that the discharge of oil 'was the result of gross negligence or willful misconduct' by BP," Barbier said in his written ruling. "BP's conduct was reckless."

In response, BP said it would challenge the ruling because it believes the standard for proving "gross negligence" was not met. "BP believes that an impartial view of the record does not support the erroneous conclusion reached by the District Court."

If the gross negligence ruling stands, it could create a tough new standard and raise liability risks for the deepwater drilling and other high risk industries, legal and business experts said.

Shares of BP in the United States closed down 5.9 percent at $44.89. BP shares in London also closed down nearly 6 percent, the worst one day slide in more than four years.

Even after the Clean Water Act fines are set, BP may face other bills from a lengthy Natural Resources Damage Assessment, which could require BP to carry out or fund environmental restoration work in the Gulf, and other claims. (Reuters)

For more visit: www.businessworld.ie