US: "BP Guilty of Gross Negligence and Willful Misconduct"

By Reuters

05 September 12

BP shares biggest fallers on FTSE 100 as justice department gives examples of 'gross negligence and wilful misconduct'.

hares in BP were the biggest fallers in the FTSE 100 on Wednesday morning, dropping 3% to 423p, as the US justice department ramped up its rhetoric against the oil company for the 2010 oil spill in the Gulf of Mexico.

In new court papers, the justice department gave examples of what it calls "gross negligence and wilful misconduct" over the spill, the largest in US history.

The court filing is the sharpest position yet taken by the US government as it seeks to hold the British group largely responsible. Gross negligence is a central issue to the case, set to go to trial in New Orleans in January 2013. A gross negligence finding could nearly quadruple the civil damages owed by BP under the Clean Water Act to $21bn (£13.2bn).

The US government and BP are engaged in talks to settle civil and potential criminal liability, though neither side will comment on the status of negotiations.

"The behaviour, words, and actions of these BP executives would not be tolerated in a middling size company manufacturing dry goods for sale in a suburban mall," government lawyers wrote in the filing on 31 August in federal court in New Orleans.

The filing comes more than two years after the disaster that struck on 20 April 2010 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's coast. The rig sank two days later.

The well spewed 4.9m barrels of oil into the Gulf of Mexico for 87 straight days, unleashing a torrent of oil that fouled the shorelines of four Gulf Coast states and eclipsed the 1989 Exxon Valdez spill in Alaska in severity.

Specifically, errors made by BP and Swiss-based Transocean, owner of the Deepwater Horizon platform, in deciphering a key pressure test of the Macondo well are a clear indication of gross negligence, the justice department said.

"That such a simple, yet fundamental and safety-critical test could have been so stunningly, blindingly botched in so many ways, by so many people, demonstrates gross negligence," the government said in its 39-page filing.

BP rejects the charge. "BP believes it was not grossly negligent and looks forward to presenting evidence on this issue at trial in January," the company said in a statement. A Transocean spokesman had no immediate comment.

On 13 August, BP urged US district judge Carl Barbier to approve an estimated $7.8bn settlement reached with 125,000 individuals and businesses, asserting its actions "did not constitute gross negligence or wilful misconduct".

The government said Barbier should avoid making any finding about BP's potential gross negligence when he rules on the settlement. Barbier will hold a fairness hearing on that settlement on 8 November.

Barbier should also disregard claims made by BP that minimise the environmental and economic impacts of the spill, the government said, citing environmental damage like severe ill health of dolphins in Louisiana's Barataria Bay, which saw some of the heaviest oiling from the spill.