TradeWinds

A US judge’s decision to slap BP with a finding of gross negligence in the Deepwater Horizon oil spill case could have a ripple effect on shipowners, maritime lawyers say.

Last week’s decision by District Judge Carl Barbier exposes the UK-headquartered energy giant to up to $18bn in fines for the 2010 drillship incident because, under the same US laws that cover tanker spills, civil penalties are quadrupled in cases of gross negligence compared with “ordinary negligence”.

BP is widely expected to appeal to the Fifth Circuit Court of Appeals, whose decisions are binding across most of the oil production belt of the US Gulf Coast.

Eugene O’Connor, a partner at law firm Montgomery, McCracken, Walker & Rhoads, tells TradeWinds that although the decision is only binding in the federal judicial district for eastern Louisiana, it will likely be persuasive across the districts under the circuit’s umbrella. However, it is not a groundbreaking ruling for US maritime law.

“An oil spill was bad news for a ship before [this] decision,” he said. “I think the significance of the decision is, at least in the Fifth Circuit, the possibility of enhanced fines based on gross negligence are greater than they had been before.”

In the ongoing New Orleans trial that followed the blowout on the Transocean drillship Deepwater Horizon, US government lawyers argued that whether negligence rises to the level of gross negligence depends on an objective test — whether BP’s actions represented an extreme departure from ordinary standards of care.

Lawyers for BP argued that there is a subjective element to the question.

There must be proof of a “culpable mental state”, they argued In other words, there was a conscious indifference to that extreme departure from ordinary safety practices. Ultimately, Barbier sided with the government’s definition but went on to add that the failure to conduct a new negative pressure test after the failure of a prior test on the Deepwater Horizon amounted to gross negligence even under BP’s definition of the term.

The maritime law team at Washington DC firm Blank Rome told clients this week that, following the decision, offshore contractors should review their safety management policies to ensure a high standard of care.

Partner Gregory Linsin tells TradeWinds that shipowners should already be reviewing their safety management systems on an ongoing basis but the Deepwater Horizon ruling serves as a reminder.

“It is, I think, a good opportunity for folks in the industry to ensure that they have adequate risk minimisation policies in place,” he said.

“Deepwater Horizon ruling puts focus on prevention” by Eric Martin Stamford, originally appeared in the September 12, 2014 edition of TradeWinds. For more information, please click here or visit www.tradewindsnews.com.

Reprinted with permission from TradeWinds.