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BP Logo (Archive photo, 29.07.2008).EPA/HUGO PHILPOT 23.02.2012) +++(c) dpa - Bildfunk+++
Image: picture-alliance/dpa

Record fine

Christina Bergmann (DW Washington) / sgb
November 17, 2012

The $4.5-billion fine levied on BP for the Gulf of Mexico oil spill in 2010 is the highest ever in the United States, although environmentalists had hoped for more. The company now faces further charges.


"For this company, $4.5 billion is basically a rounding error," Greenpeace research director Kert Davies said. "It is only a fraction of what they spend on a yearly basis to look for oil."

The sum, around 3.5 billion euros, is the fine levied on energy company BP as punishment for errors and omissions prior to the Deepwater Horizon disaster off the coast of Louisiana. Most observers had expected that the settlement, announced on Thursday (15.11.2012), would be higher. Davies argues that the amount would have had to be greater to actually have had a deterrent effect.

But David M. Uhlmann of the University of Michigan School of Law, considers the penalty "remarkable" and a significant deterrent - it is three times higher than any other penalty in similar cases in US history. Nevertheless, the sum lies at the lower end of what is acceptable, said Uhlmann, a Department of Justice veteran, who was head of the department of environmental crime from 2000-2007. "[It] pales in comparison to the tens of billions of harm that BP caused."

Profit over human lives

As a former prosecutor, Uhlmann was also surprised that BP was allowed to pay off the fine over five years. The company does not have cash flow problems: In 2011, BP posted a profit of over $25 billion (around 20 billion euros). When the Deepwater Horizon oil rig exploded in the Gulf of Mexico in April 2010, 11 people lost their lives. For months, the leak on the ocean floor could not be capped, and an estimated 780 million liters of oil poured into the sea.

Davies approves of the fact that not only the company, but also three individuals were taken to court: "Real people made real mistakes. Real people were negligent." They wanted to do everything as quickly and as easily as possible to increase profits and exploit the well as quickly as it possibly could be and then move on, he said. Profit took precedence over human lives and the environment.

The right people in the dock?

The two highest-ranking BP employees on the rig, Robert Kaluza and Donald Vidrine, face manslaughter and other charges. The maximum penalty is 10 years in prison for each of those killed. Uhlmann said it is important to put people on trial, but questioned whether the two platform supervisors belong in the dock. "This was a corporate culture run amok." The supervisors, he said, are not responsible for the corporate culture.

The disaster, Uhlmann said, was not a matter of misinterpreting a single number once. "There were issues with this well for weeks and months prior to the blowout. There were a whole host of questions about how the well was drilled; about how it was being sealed up; there was faulty cement being used by Halliburton, one of the contractors in the case; the drilling rig itself, which was operated by yet another company, Transocean, had a host of safety issues; the blowout preventer did not work. You obviously can't blame all of that on the rig supervisors." The mistakes of Transocean and Halliburton were not addressed in the court case that has now ended.

Water pollution charges still pending

In a Saturday, June 12, 2010 file photo, crude oil from the Deepwater Horizon oil spill washes ashore in Orange Beach, Ala. BP agreed late Friday March 2, 2012 to settle lawsuits brought by more than 100,000 fishermen who lost work, cleanup workers who got sick and others who claimed harm from the oil giant's 2010 Gulf of Mexico disaster, the worst offshore oil spill in the nation's history. The momentous settlement will have no cap to compensate the plaintiffs, though BP PLC estimated it would have to pay out about $7.8 billion, making it one of the largest class-action settlements ever. After the Exxon Valdez disaster in 1989, the company ultimately settled with the U.S. government for $1 billion, which would be about $1.8 billion today. (Foto:Dave Martin, File/AP/dapd)
Oil washed up on shore in Louisiana, Mississippi, Alabama and FloridaImage: AP
In this April 21, 2010 photo provided by the U.S. Coast Guard, fire boat response crews spray water on the burning remnants of BP's Deepwater Horizon offshore oil rig. The gargantuan legal bill for the 2010 catastrophic oil spill in the Gulf of Mexico is coming due for BP as a federal trial opens Monday, Feb. 27, 2012 to determine the company’s liability for the blowout of its Macondo well. On the cusp of trial, phalanxes of lawyers, company officials and state officials spent the final hours in high-stakes settlement talks that law experts believed could still yield a deal right before the courtroom doors open Monday morning. (Foto:US Coast Guard, File/AP/dapd)
The Deepwater Horizon oil rig exploded in the Gulf of Mexico on April 20, 2010Image: AP

The charges against BP manager David Rainey are a different matter. He told a congressional hearing that the volume of leaking oil was well below the actual amount. BP admits to withholding documents and making false statements to Congress. This is important for the next steps in the case against BP: the indictment based on the Clean Water Act. Here, the penalty is based on the amount of oil spilled and it is probably much higher than the current settlement.

Do the charges have implications for BP's drilling on American soil? Davies points out that there were originally calls to bar BP from receiving any permits. The current agreement provides for greater restrictions and oversight for BP facilities; for Davies, this means "business as usual." This is consistent with the law as it stands, Uhlmann said: "Major companies don't lose contracts, or the ability to obtain permits, even when they commit criminal offenses in the United States." If the violation is stopped, permits can be reissued.

Many civil lawsuits pending

BP's admission that it made mistakes can now be used against the company in civil cases. "But if you look carefully at what they've admitted to, it's actually not very much," Uhlmann said, "They admitted to failing to interpret something called negative pressure readings, which happened just before the blowout. They didn't admit to anything else." It is therefore questionable to what extent the judgment will benefit later cases, he said.

Even Scott Galante, a lawyer, sees no direct impact on the civil cases and compensation payments that have already been going on for over two years. The attorney represents clients in New Orleans who were affected by the oil spill, such as seafood restaurants and tourism businesses. Galante considers the $4.5 billion penalty, some of which is to go to people hit by the spill, "substantial." He points out that it is only one small part of the expected total that BP must pay because of the oil spill. The expected penalties for water pollution and a series of civil lawsuits will probably be in the high tens of billions. "If these aren't behavior-deterrent numbers, I would think there are no kinds of fines that would cause companies to change their behavior," he said.

A brown pelican is seen on the beach at East Grand Terre Island along the Louisiana coast on Thursday, June 3, 2010. Oil from the Deepwater Horizon has affected wildlife throughout the Gulf of Mexico. (AP Photo/Charlie Riedel)
Many birds, like this pelican, and other wildlife were killed by the oil spillImage: AP
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