On January 27th, as the U.S. Justice Department expounded upon the catastrophic harms of offshore oil drilling in the trial against BP for the 2010 Gulf of Mexico oil spill, President Obama reneged on a 2008 campaign pledge by proposing to open up a vast stretch of the Atlantic Coast to offshore oil drilling for the first time.
Doing so would be tragic. Recent judgments in the civil trial against BP, which has entered its third and final phase in a New Orleans court, will not only result in a significantly reduced fine for BP, but may also mean that no meaningful regulatory changes are implemented to reduce the likelihood of another similar disaster.
Press attention has largely focused on U.S. District Court Judge Carl Barbier's January 15th finding that nearly one million fewer barrels of oil were released into the Gulf than scientists working for the federal government had concluded. Even more significant, however, was Barbier's concurrent finding that BP was not grossly negligent in its planning or preparation for a deepwater blowout or oil spill – dramatically lowering the stakes in how BP will be punished for its inability to stop or deal with the largest offshore drilling oil spill in history.
In September, Barbier had previously found BP grossly negligent for causing the April 20th, 2010 blowout of the Macondo oil well, the sinking of the Deepwater Horizon oilrig, and the initiation of the oil spill. This enables him to fine BP as much as $4,300 per barrel of oil spilled under the U.S. Clean Water Act, though he is not required to do so. The latest rulings now help guide his determination of exactly how much that fine will be.
They are, however, misguided. They mean that even though Barbier found BP liable for causing the blowout by making decisions "primarily driven by a desire to save time and money" which were "dangerous" and "motivated by profit," the company will not be liable for punitive damages and will be fined far less than the $18 billion originally sought by the government – at least one expert has predicted the fine could be as low as $3.5 billion. But it could be even less. In a statement, BP says that it is continuing to review the Court's decision and "believes that considering all the statutory penalty factors together weighs in favor of a penalty at the lower end of the statutory range" – which is a mere $140,000. The ruling also suggests that critical safety improvements are now far less likely to occur.
1. BP Knew
BP knew that a blowout of its Macondo well was not only possible, but probable.
The U.S. Minerals Management Service (MMS) – the federal agency that formerly oversaw offshore oil operations – warned in 1999, "As the industry advances into deep water exploration, the risks of blowout increase." It was correct: The number of deepwater blowouts in the Gulf of Mexico nearly tripled from 1999 to 2010.
BP certified that it was capable of meeting federal regulations requiring that it control a blowout and any subsequent release of oil as quickly and thoroughly as possible and that it conduct all operations in a way that ensures the safety and protection of personnel, equipment, natural resources and the environment.
In its February 2009 Initial Exploration Plan for the Macondo well submitted to MMS, BP named the "worst-case-scenario" as a blown-out well and certified that it could handle a blowout with a release of 162,000 barrels of oil per day – approximately three times the average daily output of the actual 2010 oil spill.
2. BP Lied
But expert findings, including those presented to the Court by the Aligned Party plaintiffs and expert witness Dr. Robert Bea, a 60-year-oil-industry-veteran and head of the Deepwater Horizon Study Group, conclude that BP failed to plan or prepare for a deepwater blowout or oil spill. Instead, the investigations of the National Oil Spill Commission make clear that the company learned on the fly, applying shallow water methods (meant for incidents approximately 400 feet below the ocean floor) to a deepwater blowout (an additional 4,600 feet below), with predictable failures.
"BP was grossly negligent and reckless by not having proper source control planning," says Mary Whittle, a former trial attorney with the U.S. Department of Justice Environment and Natural Resources Division, and now staff attorney at Earthjustice, an environmental nonprofit organization. "It was entirely foreseeable that you would have this kind of subsea blowout and BP didn't take the proper preparations to prevent it or fix it when it happened."
3. BP Wasn't Prepared for a Blowout
BP's only blowout "plan" was reliance on the Blowout Preventer (BOP) – a device with an approximate 50 percent success rate. Moreover, as Judge Barbier concluded, BP had allowed the BOP to run out of batteries, leaving it incapable of shutting-in the well. With the failure of the BOP, BP was out of tricks.
As the Deepwater Horizon Study Group found, "The failure of the BOP, although foreseen and foreseeable . . . was ostensibly never contemplated by BP – there were no contingency plans to address the developing situation as there were no spill contingency plans to deal with the scope of the disaster."
4. BP Expected a 150-Day, 24-Million Barrel Oil Spill
BP now had just one method in place for shutting in the well: drilling a second "relief well" which BP estimated could take 150 days (it took 152). Based on its own worst-case-scenario estimates, therefore, BP anticipated an oil spill as great as 24 million barrels of oil.
5. BP Wasn't Prepared for the Oil Spill
BP's 500-page Gulf of Mexico Oil Spill Response Plan was not only thoroughly inadequate, but here too BP was utterly unprepared to implement it, resulting in just 5 percent of the released oil being recovered – half to a third as much as the historical rate for U.S. spills.
Shockingly, the oil spill plan prepared only for cleaning up or capturing oil after it reached the ocean surface. BP did not have the appropriate nor adequate number of containment ships ready to hold oil once it was siphoned off of the water or captured at the wellhead – contributing to the unprecedented number (over 400) of toxic "controlled burns" of collected oil on the surface of the ocean. And though BP's oil spill plan correctly predicted that oil from a blowout could reach the shores of Louisiana, Mississippi, Alabama and Florida, BP failed to have ready the necessary boom or skimmers to collect oil and stop it from hitting shore.
6. BP Conducted a Science Experiment on the Gulf
BP's oil spill plan included using chemical dispersants to address a limited surface oiling. In failing to prepare for a massive underwater oil spill, however, BP conducted a massive science experiment in the Gulf, releasing the toxic chemical dispersant Corexit underwater at the source of the blowout for the first time ever and in unprecedented quantities.
Only after the experiment was well underway would scientists discover just how toxic the dispersant was to humans, wildlife, and vegetation; that the presence of the dispersant reduced the number of naturally occurring microbes that consume oil; the combination of dispersant and oil was more toxic and harmful than either element alone; and that the combination made the oil too liquid for a key containment ship to siphon.
7. BP Didn't Follow Its Own Best Practice
BP did not have a capping stack (a device similar to a smaller BOP placed atop a failed BOP) ready or available – even though, while not a permanent solution, it was well known by both BP and the industry as the best device for temporarily shutting in a deepwater well.
Former BP CEO Tony Hayward admitted in a court deposition that the company "certainly didn't have all of the tools" that were necessary to shut in the well, and "[w]e didn't have a capping stack that would go instantly into place. We didn't have some of the things that you would ideally want."
When asked why BP did not have a capping stack ready, Bea, head of the Deepwater Horizon Study Group, suggested to me that "It would have cost money."
8. BP Knew Everything Else Would Fail
Without the capping stack, BP began a series of risky, expensive, time-consuming and ill-fated endeavors to shut in the well, all of which predictably failed. Hayward told CNN as BP began the first of these efforts, "It's a technology first. It works in three [hundred] to four hundred feet of water, but the pressures and temperatures are very different here . . . So that is why we cannot be confident that it will work."
Next came a series of "Top Kills" and "Junk Shots," which BP knew would work only on a blowout spewing at most 15,000 barrels of oil a day. At this time, however, BP knew (though it had yet to divulge it to the public or the federal government) that the rate was much greater than this. "There is no dispute that BP lied about the amount of oil that flowed from the well," Judge Barbier concluded.
It was not until July 2010 that the federal government forced BP to use the capping stack, which was successfully installed on July 15th, the first time in nearly three months that no oil spewed from the well. The well was not permanently shut in, however, until September 19th, 152 days after the blowout began, when the relief well was finally complete.
9. BP's Oil Was Magically Disappeared
Independent and government scientists agree that 5 million barrels of oil spilled from the well. BP argues it released 3.26 million barrels. All agree that 0.81 million barrels were captured at the wellhead. Judge Barbier, however, was not fully convinced by either side's calculations: Without explaining how he arrived at the number, he ruled that 3.19 million barrels of oil escaped into the Gulf of Mexico (automatically reducing the potential maximum penalty from $18 billion to $13.7 billion) – a seemingly random position between the two estimates. Oh, if only ruling made it so.
10. BP and (Everyone) Got Away With It
Judge Barbier ruled that because the federal government accepted BP's Exploration and Oil Spill Response Plans, and because BP met the industry standard (i.e., no one else in the industry was any better prepared), that BP was not responsible for the post-blowout failures. He could have ruled that both federal regulations were inadequate and BP's activities were grossly negligent, but chose not to do so. The judge's final ruling on the total fine BP owes under the Clean Water Act is expected in May.
In an emailed response to questions, a BP spokesman reiterated the judge's rulings that BP's efforts adhered to government regulations and industry standards. Inadvertently emphasizing how poor both are, the spokesperson highlighted that it was not industry practice to have a pre-built capping stack and that relief wells (which take 150 days to drill) remain the only known method for permanently shutting in a deepwater blowout. BP reports spending more than $28 billion in spill response, cleanup and claims.
Clearly, federal regulators failed miserably. But their failure does not insulate the industry from adhering to existing regulations. If the companies are unable to do so, then offshore oil drilling should not take place. The regulations are also woefully inadequate, as they boil down to little more than requiring a "commitment to do the right thing," rather than the actual capacity to do so.
In June, the U.S. Chemical Safety Board, the lead independent federal agency that investigates industrial accidents, warned that "another similar catastrophic accident" to the Deepwater Horizon remains possible because of the lack of necessary regulatory or industry reforms.
"It is maddening," says Professor Bea. "It is business as usual in the Gulf."