Canadian Manufacturing

BP in court to avoid maximum penalty for Gulf oil spill

The energy giant is calling expert witnesses in hopes of convincing the court a US$13-billion civil penalty is too onerous



NEW ORLEANS—BP struggled for 87 days to contain the millions of gallons of crude that spilled into the Gulf of Mexico in 2010, but on January 26 an expert witness called its cleanup response exemplary.

“They were very prepared,” said Frank Paskewich, a retired Coast Guard captain and president of Clean Gulf Associates Inc., an oil spill response co-operative.

Paskewich also testified that 37 per cent of the spilled oil was recovered or broken down by skimmers, a dispersant and burning, compared to just eight per cent in the 1989 Exxon Valdez disaster off Alaska’s shore.

But he was forced to acknowledge that he isn’t sure about the long-term impact of the chemical dispersant called Corexit that was used to break up the oil. And Justice Department attorney Brandon Robers noted that his co-operative is funded by oil companies and led in part by BP.

BP is trying to convince U.S. District Judge Carl Barbier that it shouldn’t pay the top civil penalty of $13.7 billion for polluting the gulf, since it has already spent $42 billion on cleanup, criminal penalties and civil settlements.

BP PLC’s overall market value is $122 billion, but its lawyers have said that paying the top fine would strain the finances of BP Exploration and Production, the unit deemed responsible for the spill. Government lawyers countered that any fines can be borne by more than one part of the corporation.

The government also seeks a penalty of more than $1 billion from Anadarko Petroleum Co., a minority partner in the Macondo well.

The judge isn’t expected to rule until April at the earliest. He already found that BP acted with “gross negligence” in the explosion, which caused its Macondo well to send plumes of oil billowing to the surface. He also found that 3.19 million barrels of oil were spilled, with a maximum penalty of $4,300 per barrel.

In this latest phase of the trial, government experts have described environmental, economic and social damage, and BP has disputed much of that testimony, arguing that the Gulf’s environment and economy came back strong.

The federal RESTORE Act, passed after the spill, would set aside 80 per cent of the Clean Water Act penalties for environmental and economic restoration projects along the Gulf Coast, and set aside the rest in a federal trust fund to cover the costs of future spills.

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