America’s Department of Justice (DoJ) said that it intends to prove BP guilty of “gross negligence” in the 2010 Deepwater Horizon disaster in the Gulf of Mexico, America’s worst oil spill. A trail is scheduled to begin in January.
Government lawyers said BP executives’ behaviour “would not be tolerated in a middling size company manufacturing dry goods for sale in a… mall”. BP had hoped to reach a $15bn settlement with the authorities to resolve all penalties. The stock fell 4.5% on the news.
What the commentators said
The aggressive language in the DoJ’s statement suggests that chances of a settlement have receded. Now billions of dollars hang on whether the government can prove gross negligence, as Ed Crooks noted in the FT. If so, penalties per barrel spilled under the Clean Water Act would quadruple to $21bn. Compensatory and punitive damages would come on top. The $37bn BP set aside to deal with the fallout from the spill did not foresee the higher Clean Water Act estimate.
However, proving gross negligence is tricky, said Emily Pickrell in The Houston Chronicle. For starters, “there isn’t a lot of case law” to guide the judge. And BP wasn’t the only firm involved with this well. “Determining gross negligence among multiple contractors with overlapping responsibilities would be exceedingly difficult using the existing muddled definitions of that term,” reckoned Blaine LeCesne of Loyola University. In any case, the trial could drag on for years, said Richard Griffith of Oriel Securities. All this uncertainty will keep depressing the shares.