United States v. BP Exploration & Prod., Inc. (In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010)
| Decision Date | 30 November 2015 |
| Docket Number | MDL 2179 |
| Citation | 148 F.Supp.3d 563 |
| Court | U.S. District Court — Eastern District of Louisiana |
| Parties | In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, This Document Applies To: No. 10-4536, United States of America v. BP Exploration & Production, Inc., et al. |
FINDINGS OF FACT AND CONCLUSIONS OF LAW
PENALTY PHASE
A. Factor 1: Seriousness...568
B. Factor 2: Economic Benefit...570
C. Factor 3: Culpability...571
D. Factor 4: Other Penalties for Same Incident...572
E. Factor 5: Prior Violations...573
G. Factor 7: Economic Impact on the Violator...575
H. Factor 8: Other Matters...576
A. Purpose of the CWA Civil Penalty...576
B. Legal Standard and Methodology...579
C. Analysis of the Penalty Factors...580
1. Pursuant to Federal Rule of Civil Procedure 52(a), the Court enters these Findings of Fact and Conclusions of Law respecting the “Penalty Phase,” a bench trial held over eight days between January 20 and February 2, 2015. The Court determines here the amount of civil penalties to be paid by defendant Anadarko Petroleum Corporation (“Anadarko”) under the Clean Water Act (“CWA”), 33 U.S.C. § 1321(b)(7).1
2. If any finding of fact is in truth a conclusion of law or any conclusion actually a finding of fact, it shall be treated as such, labels notwithstanding.
A. Factual Background
3. This multidistrict litigation and the referenced member case arise from the April 20, 2010, blowout, explosions, fire, and subsequent oil spill involving the mobile offshore drilling unit DEEPWATER HORIZON (sometimes referred to as “HORIZON”) and the well, known as Macondo, it had drilled in Block 252, Mississippi Canyon (“MC252”), on the Outer Continental Shelf approximately fifty miles from the Louisiana coast.2
4. Eleven of the one hundred twenty-six people aboard the HORIZON died in the explosions and fire; at least seventeen others were seriously injured. The survivors evacuated to a nearby supply vessel, the M/V DAMON BANKSTON.
5. Fueled by hydrocarbons from the well, the HORIZON burned continuously until it capsized and sank on the morning of April 22. As the rig descended, the marine riser—the approximately 5,000 feet of pipe that connected the rig to the subsea blowout preventer and well—collapsed and fractured.
6. Each day for nearly three months, thousands of barrels of oil and gas from the MC252 reservoir flowed into and up the Macondo Well, through the blowout preventer and broken riser, and into the Gulf of Mexico.
7. After several attempts failed to stop the flow of hydrocarbons, a device known as a capping stack was attached to the top of the blowout preventer and, on July 15, 2010, halted the discharge. By that time, approximately 3.19 million barrels of oil had spilled into the Gulf.3 In mid-September, a relief well intercepted and sealed Macondo with cement.4
8. It was not long after the blowout that the first lawsuits were filed. Since that time, over 3,000 cases, with well over one hundred thousand claimants/plaintiffs, have been filed. On August 10, 2010, the Judicial Panel on Multidistrict Litigation consolidated most5 federal cases arising from these events into Multidistrict Litigation 2179 (“MDL 2179”), pending before this Court.6
B. The Government's Complaint
9. On December 15, 2010, the United States filed in this Court a complaint captioned United States v. BP Exploration & Production, et al. (C.A. no. 10–4536), which was consolidated with MDL 2179.
10. The Government's complaint sought two forms of relief: civil penalties under the CWA and a declaratory judgment of liability under the Oil Pollution Act of 1990 (). Only the CWA claim is at issue here.
11. The CWA prohibits the discharge of “harmful” quantities of oil into or upon covered waters or adjoining shorelines, in connection with activities under the Outer Continental Shelf Lands Act or Deepwater Port Act of 1974, or which may affect certain natural resources.7 Certain persons who violate this prohibition are subject to civil penalties: “Any person who is the owner, operator, or person in charge of any vessel, onshore facility, or offshore facility from which oil ... is discharged in violation of [the CWA], shall be subject to a civil penalty ....”8
12. The Government's complaint sought civil penalties against BP Exploration & Production, Inc. (“BPXP”), Anadarko,9 MOEX Offshore 2007 LLC (“MOEX”), and various Transocean entities (collectively, “Transocean”).
13. For all times relevant to these Findings of Fact and Conclusions of Law, BPXP, Anadarko, and MOEX co-owned the Macondo Well. BPXP owned a 65% interest in the well and was the designated “operator.”10 Anadarko and MOEX owned 25% and 10% interests, respectively, and both were “non-operators.”11 Transocean owned the DEEPWATER HORIZON, which was hired by another BP entity to drill the Macondo Well.
14. The Government settled its CWA claims with MOEX and Transocean before the Penalty Phase trial.12 After the Penalty Phase trial, the Government reached a tentative settlement with BPXP.13 Consequently, only the CWA claim against Anadarko remains at issue.
C. Relevant Prior Rulings
15. On February 22, 2012, the Court held on partial summary judgment that Anadarko is liable for civil penalties under the CWA, because it was an “owner” of an “offshore facility” (i.e., the Macondo Well) “from which” a harmful quantity of oil discharged.14 This ruling has been affirmed on appeal.
16. The Court has also issued several decisions that, when combined, establish the maximum amount of the penalty that could be imposed against Anadarko under the CWA.
17. The CWA, as codified following the 1990 amendment, states that a person found liable for a harmful discharge of oil “shall be subject to a civil penalty in an amount up to $25,000 per day of violation or an amount up to $1,000 per barrel of oil,” except where the discharge “was the result of gross negligence or willful misconduct,” in which case the penalty “shall be ... not less than $100,000, and not more than $3,000 per barrel of oil.”15
18. On August 26, 2011, while ruling on motions to dismiss the “B1” Master Complaint, the Court held that Anadarko was not negligent as a matter of law with respect to the loss of well control, blowout, explosions, or the oil spill.16 From this ruling it follows that Anadarko is not subject to the enhanced civil penalty for gross negligence or willful misconduct.
19. On February 19, 2015, the Court ruled that a federal regulation17 adjusting the maximum amount of the CWA civil penalty was valid.18 Thus, the maximum per-barrel penalty that may be imposed upon Anadarko is $1,100 per barrel, not $1,000 per barrel as stated in the United States Code.
20. Also, and as mentioned above, the Court determined in Phase Two that 3.19 million barrels of oil discharged into the Gulf of Mexico.19
21. In light of these rulings, the maximum civil penalty that could be assessed against Anadarko is $3,509,000,000 or approximately $3.5 billion (3,190,000 x $1,100).
D. The CWA's Civil Penalty Factors
22. To determine the actual amount of the civil penalty, not simply the maximum, the CWA states that the Court “shall consider” eight factors:
23. Between January 20 and February 2, 2015, the Court conducted a “Penalty Phase” trial where the parties presented evidence on these factors. Afterwards, the parties submitted post-trial briefing and proposed findings, and the Court took the matter under advisement.21
24. The Court has considered all of the evidence, counsels' briefs and proposed findings, and the applicable law.
25. Here the Court considers each penalty factor, alone and without reference to the others, and makes certain findings. In the Analysis and Conclusions of Law section below, the Court weighs the factors against one another and determines the amount of the penalty.
A. Factor 1: Seriousness
26. The first factor to consider is “the seriousness of the violation or violations.”22
27. The Government argues that the oil spill was extremely serious—that it was a massive disaster which resulted in actual and potential harm to the environment, human health, the Gulf Coast economy, and the social fabric of Gulf Coast.
28. Anadarko admits that the oil spill “was extremely ‘serious' by any measure” and offered no evidence at trial relating to the seriousness factor.23
29. Given that the parties agree that the oil spill was extremely serious, the Court need not list each piece of evidence or statistic reflecting the spill's seriousness. Nevertheless, it is appropriate to recount some of the relevant facts.
30. There is no prescribed set of facts that must be analyzed under the seriousness factor. Courts have considered a variety of factors including the size of the discharge,24 its duration,25 the size of the response effort,26 the amount of compensation paid to victims,27 and whether there was harm to the environment or public. As to “harm,” courts have considered not only whether there was actual harm,28 but also whether potential harm or a significant threat of harm resulted from the discharge.29 On a related note, the Government need not quantify the harm to the environment,...
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