BP Objects to Gulf Coast States' $34B Oil Spill Claims

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BP Objects to Gulf Coast States' $34B Oil Spill Claims


NEW ORLEANS -- State and local governments along the Gulf Coast have tallied their economic and property damages from the 2010 Gulf of Mexico oil spill to come up with a $34 billion figure -- a figure BP plc calls "substantially" overstated.

The oil spill, which was caused by the Deepwater Horizon explosion in April 2010, was the worst in U.S. history. Now, the Alabama, Mississippi, Florida and Louisiana state governments, as well as a host of local governments, are making their financial claims. The $34 billion was provided in BP's financial results last month, as Reuters reported.

Citing the Oil Pollution Act (OPA) underpinning the claims, BP said it considers the methods used to calculate them to be "seriously flawed, not supported by the legislation and to substantially overstate the claims," according to the news agency. BP has also suffered from public relations, financial and legal fallout since the accident.

BP Finance Director Brian Gilvary explained that proving a loss of tax revenue by these governments would be especially difficult given that BP's response to the 2010 spill led to 40,000 people being hired and increased taxes paid as a result.

"It would be a pretty hard case to prove that there was actually a loss of tax revenue," Gilvary said.

Earlier on Tuesday, BP said that fourth-quarter 2012 profit dropped nearly 80 percent vs. the same period a year earlier. As CSNews Online previously reported, BP said its net profit dropped to $1.62 billion for the three months ended Dec. 31, down from $7.69 billion in the same period a year ago. BP took a loss of $3.85 billion to settle all spill-related federal criminal charges with the U.S. government.

An inability to settle state claims could be a wrinkle in the company's efforts to avoid a civil trial slated to start Feb. 25. It is also in talks with the federal government on a Clean Water Act liability ranging from $5 billion to $21 billion.

A BP in-house lawyer, Rupert Bondy, said the company had already provided a $42.2 billion assessment for all claims, and a total of $37 billion has already been committed through separate settlements. Bondy emphasized that BP would litigate the $34 billion in state and local claims, according to Reuters.

Even so, officials in Louisiana and Alabama have been vocal in their demands for BP to pay its debt to the Gulf Coast. Garret Graves, senior coastal adviser to Louisiana Gov. Bobby Jindal, called the $34-billion amount "extraordinary," especially because it does not include state claims under the Clean Water Act or the Natural Resource Damage Assessment process of the OPA, the news agency reported.

"Perhaps this helps BP to realize the size and scope of the problems they have caused the citizens of the Gulf," Graves said, though he cited "bright spots" such as tourism and seafood safety agreements BP struck with the states, and BP's "early restoration" agreement for the coast.