This week, Judge Barbier released his opinion in the Deepwater Horizon litigation.  His 150+ page opinion defies easy description, but in very brief:

Judge Barbier concludes the reason for the blowout was not the cement, it was the drilling process chosen principally by BP.  The most egregious fault on BP was in failure to perform an adequate negative pressure test.  The negative pressure test is one where the pressure is bled down to zero and it is supposed to stay at zero.  When BP and Transocean performed it, the pressure rose to 1400 PSI.  BP and Transocean came up with elaborate explanations about the “bladder effect” to explain how this could happen.

Five days post-incident, BP’s vice president of drilling responded, as Judge Barbier explained, as follows:

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He concluded BP was 67% at fault; Halliburton was 3% at fault, and Transocean 30% at fault.

With regard to the legal conclusions –

Judge Barbier concluded BP was grossly negligent under the Clean Water Act.  After an exhaustive exploration of the definition of gross negligence under the CWA, Judge Barbier decided first that the BP Well Site Leader Don Vidrine’s actions constituted gross negligence and willful misconduct.  He next concluded Mr. Vidrine’s actions could be imputed to BP under the Clean Water Act.  The effect is to multiply the penalties per barrel of oil released.

Under General Maritime law, Mr. Vidrine was still grossly negligent, but his gross negligence could not be imputed to BP.  Under maritime law (as interpreted by the Fifth Circuit), the gross negligence of an employee cannot be imputed to the company unless the company was aware of or ratified the employee’s conduct.  Even though Mr. Vidrine was the well site leader, he was not high enough up the food chain for his actions to be imputed to BP for purposes of punitive damages.  The plaintiffs argued against this at length, focusing on BP’s lack of training and the absence of a culture of safety.  Interestingly, Judge Barbier’s opinion dismisses this in a sentence.

The case will be appealed.  Its factual conclusions will probably not be challenged successfully, but its legal conclusions will get a long look.  If the legal conclusions stand, for the boat owner and underwriter’s perspective, Judge Barbier’s opinion will not be in any way a material change in the state of the law; it will stand as a well-reasoned and thorough analysis of unique facts.  Much is made of the possibility for punitive damages under general maritime law.  BP, Transocean, and Halliburton were found to be the authors of the most catastrophic man-made casualty in the Gulf.  If they are not held liable for punitive damages, the take-away from the case may be that punitive damages require truly wanton conduct.