Almost two weeks have passed since Judge Carl Barbier handed down his blistering opinion apportioning a majority of the fault to BP for the 2010 Gulf oil spill. As a follow-up to last week’s article, which detailed Judge Barbier’s ruling, we aim to dig deeper: Judge Barbier found that BP’s “gross” negligence opens them up to enhanced civil penalties under the Clean Water Act (CWA). But what does this mean for BP? Was this the right result?
The thrust of Judge Barbier’s opinion was to apportion fault, or responsibility, for the harrowing 87-day oil spill which followed Deepwater Horizon’s explosion. As we noted in last week’s article, Judge Barbier found BP 67 percent at fault for the spill and reserved only 30 percent and 3 percent for Transocean and Halliburton, respectively. Importantly, and the subject of this week’s in-depth look at his ruling, Judge Barbier found that BP’s “gross negligence” and “willful misconduct” opens them up to enhanced civil penalties under the Clean Water Act. Under the CWA, where a “person” causes a hazardous oil spill in navigable waters of the United States, and where this spill is the “result of gross negligence or willful misconduct… the person shall be subject to a civil penalty of not less than $100,000, and not more than $3,000 per barrel of oil or unit of reportable quantity of hazardous substance discharged.” 33 U.S.C. §1321(b)(7)(D). As Judge Barbier notes, this enhanced penalty provision does not require any “specific level of corporate management,” but instead opens up enhanced penalties to entities who violate this provision of the Clean Water Act whether it’s the result of systemic, gross negligence or not.
It hasn’t always been this way. In the days prior to the enactment of the Oil Pollution Act of 1990 (OPA), the Clean Water Act contained a two-tier penalty structure which capped damages at $50,000 for a violation, and complainants could access the higher civil penalty of $250,000 if the negligence was systemic and authorized by the “person in charge,” as the old law states. When the OPA was enacted, however, it brought significant change to the Clean Water Act this by opening enhanced penalties to violators regardless of whether the negligence was authorized or known to the corporate higher-ups. It’s not likely that this distinction would’ve mattered to Judge Barbier, as he pointed to instances of negligence at all levels of BP’s operation at the Macondo well.
BP’s “Gross Negligence” and “Willful Misconduct”
A finding of “gross negligence” exposes BP to a much greater degree of monetary liability than a finding of “mere” negligence. Just ask Transocean and Halliburton who avoided this enhanced designation. Accordingly, Judge Barbier’s ruling was careful to delineate BP’s specific conduct which fell below the appropriate standard of care to make their negligence “gross.” Specifically, Judge Barbier found that “drilling the final 100 feet of the well with little or no margin, running the production casing with the float collar in unconverted mode and without a shoe filter, failing to verify whether the float collar converted by reverse circulating the well, not conducting a CBL, using LCM as a spacer for the displacement and negative pressure test, misinterpreting the negative pressure test, allowing simultaneous operations to occur during displacement, and failing to provide a displacement schedule to the Transocean drill crew.”
As Judge Barbier notes, “these instances of negligence, taken together, evince an extreme deviation from the standard of care and a conscious disregard of known risks.”
As a State whose economy depends on the vitality of the oil industry, this ruling could leave oil companies fearful of embarking on business in or around Louisiana. And who could blame them? In addition to numerous settlements and cleanup costs, a Federal Court in Louisiana has now opened BP to billions in civil penalties under the Clean Water Act. It would be tough to imagine this ruling doesn’t play into the executives’ calculus when determining whether to do business in Louisiana. In a State that contains 10 percent of known oil reserves in the entire United States, the resources from which account for a large percentage of all jobs in Louisiana, deterring oil companies from conducting business here could be devastating to the Louisiana economy and to the hard-working Louisiana citizens who depend on this industry to put food on their table.
Having said that, Louisiana is more than a repository of oil. We’re the Bayou State–known for our beautiful wetlands which are home to masses of unique flora and fauna found exclusively within our borders. We’re also a population known for our long-time, peaceful co-existence with the local wildlife and natural surroundings. While the energy industry is important to Louisiana, so is the health of our environment. One view to consider is that, perhaps this is why we have environmental regulations such as the Clean Water Act.
In 1948, Congress enacted the Water Pollution Control Act to combat rising levels of water pollution. However, even with sweeping regulations such as the Water Pollution Control Act, water pollution still continued to rise. For instance, in 1968, 20 years after the enactment of this Water Pollution law, pollution in the Chesapeake Bay caused $3 million annually in losses to the fishing industry; in 1969, bacteria levels in the Hudson River were at 170 times the safe limit; and in 1971, the FDA reported that 87 percent of swordfish samples had mercury levels that were unfit for human consumption. It became clear that the 1948 water pollution statute was ineffective, which led to sweeping amendments in 1972. The amended statute–one that sets real standards and provides for real enforceability–is what we have today, and is what became known as the Clean Water Act.
On one hand, Judge Barbier took an oath to uphold and enforce the laws of the United States. Under this view, Judge Barbier is a mere technician applying the law to novel factual scenarios. However, on the other hand, Judge Barbier’s ruling can be viewed as giving effect to the noble and important policy concerns that spurred the 1972 amendments to the Water Pollution Control Act–A veritable “tip of the hat” to our national consensus which favors a clean environment. This view would certainly be justified. Looking at the environmental impact from the 2010 oil spill by itself, our local aquaculture has suffered grievous harm which persists to this day. “Four years after the oil disaster, some 14 species showed symptoms of oil exposure,” states a report from the National Wildlife Federation. “At the top of the food chain, more than 900 bottlenose dolphins have been found dead or stranded in the oil spill area since April 2010,” and a study by the National Oceanic and Atmospheric Administration in Barataria Bay found dolphins were underweight and anaemic and showed signs of liver and lung disease. This hasn’t just affected dolphins, though. “Roughly 500 stranded sea turtles have been found in the area affected by the spill every year from 2011 to 2013.” Researchers have also recently confirmed that oil causes cardiotoxicity in fish.
This ruling is bittersweet, especially for Louisiana residents. While there’s little doubt that Louisianans love their home State and want to preserve its natural beauty and resources, our citizens depend on the oil industry.