Time to Pay Up: BP Charged with Financial Responsibility for 2010 Oil Spill

On April 20, 2010, a BP owned oilrig fire and explosion resulted in the largest marine oil spill in the history of the United States. Over a period of 87 days, approximately 68,000 square miles of Gulf of Mexico waters were polluted with an unrelenting flow of the slick oil (Schwartz 2015). Over the past five years, countless efforts by both the government and BP have targeted reducing the spill effects and quantifying the costs of this disaster to the environment. On January 15, 2015, Judge Carl J. Barbier of Federal District Court in New Orleans settled the dispute. He determined that BP is responsible for spilling 3.19 million barrels of oil into the Gulf of Mexico, at a cost of nearly $13.7 billion (Schwartz 2015). However, just a few days later the company began contending for lower fines by accounting for the extensive mitigation attempts BP employed after the spill (“BP Argues” 2015).

This vacillating contest between two of the main stakeholders in the case has been maintained over the five years since the spill and will hopefully end soon with the settlement deal. While other stakeholders have played significant roles in the case, this case has largely fallen into the entangled web of disputes between the federal government, BP, and environmental groups. By examining the case from a stakeholder analysis, we can begin to understand the values from which the stakeholders approach the issue and the goals they aim to accomplish in remediating the 2010 gulf spill.

By mapping out the three key stakeholders in the gulf spill case, we can better determine what influence each has in deciding BP’s financial responsibility. While arguably all three groups are just as close to the issue, the federal government is the stakeholder with the most influence due to its combination of power and authority. Using Bourne and Walker’s (2005) stakeholder analysis methodology, the government has influential power over BP and an interest in remediating the spill. The government, coming from an administrative rationalist approach, believes in implementing scientific management and cost-benefit analyses (Smith 2009). They seek to utilize scientific methods to determine the exact effect BP had on the gulf.

BP utilizes similar tactics; however, they produce much lower estimates than the government. While BP is a powerful stakeholder, in this case their power is somewhat limited because they are the stakeholder at fault. While they have an interest in remediation as well, the company’s bigger interest is not having to pay large fees to the government. Therefore, the company has been pushing for lower fines from the government.

Finally, the environmentalist groups represent the third stakeholder in this case. With the strongest interest in seeing restoration in the gulf environment and ecosystem, the environmental groups have some influence over the government by means of lobbyists and protests. This stakeholder group, however, has the least power or authority in determining the fiscal outcome for BP. Taking all three of these stakeholders into account, Judge Barbier was able to determine the financial responsibility of BP, totaling $13.7 billion. With an end now approaching in this ongoing environmental struggle between government, corporation and the environment, it is important to understand whom the key actors have been and what influence they have had. In doing so, we can fully understand the measures made to finally determine an appropriate settlement in this tragic event.

References

Bourne, Lynda, and Derek H. T. Walker. 2005. “Visualizing and Mapping Stakeholder Influence.” Management Decision 43 (5):649.

“BP Argues for Smaller Fines in Final Phase of Oil Spill Trial,” New York Times, 20 January, 2015.

John Schwartz, “Judge’s Ruling on Gulf Oil Spill Lowers Ceiling on the Fine BP is Facing,” New York Times, 15 January, 2015.

Smith, Zachary. 2009. “Public Opinion and the Environment.” The Environmental Policy Paradox:26.

Polly Ukrop

About Polly Ukrop

I am an Environmental Studies senior at Davidson College interested in Corporate Sustainability and the always complicated balancing act of interests that businesses, politicians and society face in working towards a greener tomorrow.

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