NEW YORK – Just how many barrels of oil are flowing into the Gulf of Mexico from the Deepwater Horizon spill is one billion U.S. dollars question with implications that go beyond the environment. It can also help determine how much BP and others end up paying for the disaster. Gulf Oil Spill. A clause buried deep in the U.S. Clean Water Act could expose BP and others for civil penalties are not limited to a finite cap – 75 million U.S. dollars as opposed to a cap on compensation for economic damages. The law allows the government to seek civil penalties in court for every drop of oil spills in U.S. navigable waters, including the area of BP’s leaky well.
As a result, the U.S. government to search for BP or others for $ 4,300 for every barrel leaked into the U.S. Gulf fine by legal experts and official documents.
So far, analysts and experts calculate the potential oil spill obligations mainly focused on the cost of remediation and compensation for economic damage to the involved parties. Some have also talked about criminal liability.
But the scope for civil penalties has received little attention – and they can very quickly add, depending on how aggressively the U.S. government is pursuing them.
The threat of heavy fines, underlines the importance of quantifying how much oil is pouring into the Gulf. If BP wants to staunch the leak that has now been running for at least 33 days, has estimated a spill rate of 5,000 barrels per day. But some experts say that the volume – and thus the fines – can be more than 10 times higher.
The little known and rarely used clause in the Clean Water Act was added in 1990 after the Exxon Valdez disaster in Alaska, and was meant to beef the arsenal of sanctions, the government can apply to oil Spillers order to discourage future disasters.
“These civil penalties can be astonishingly high, possibly running into billions,” said Professor David Uhlmann, director of the Environmental Law Program at the University of Michigan.
Total liability – including civil fines and the costs of remediation, economic loss and possible criminal liability – and could run into billions into tens of billions, “said Uhlmann.
Under the Clean Water Act, the Environmental Protection Agency to seek a federal court to a party whose negligence results in an oil spill in U.S. federal waters fine.
Other companies involved in the Horizon platform and oil BP can share liability, experts said. They include rig owner Transocean Ltd., Halliburton Co. masonry contractor, producer Cameron blowout preventer, and Anadarko and Mitsui, which also have interests in the oil fields.
Sharp rise in fines
The basic amount, the law is $ 1,100 per barrel spilled. But the penalty may increase to $ 4,300 per barrel as a federal court rules of the spill is the result of gross negligence. The fines were originally set at $ 1,000 to $ 3,000, but that was raised in 2004 to keep pace with inflation, said Tracy Hester, head of the Environmental Law and Policy program at the University of Houston.
(To see an EPA memo on the 2004 revision of penalties in the Clean Water Act, click here: here)
It’s unclear, however, that the EPA would seek fines, or seek maximum penalty levels to apply. EPA officials did not respond to a few calls and emails requesting comment.
If the agency acts, the penalty per barrel oil could easily push the liability than the cost of cleaning up the spill and paying legitimate claims for economic damage it causes, experts told Reuters.
“There are civil penalties that can be quite substantial. I think BP’s exposure to this is much bigger than expected,” said Harvard Law School Professor Jody Freeman, who recently served in the White House as an adviser for energy and climate change.
BP has already said it will spontaneously a $ 75,000,000 cap on liability for economic damages exceeding promise a “legitimate claim” it receives payment. But the civil fines are a wild card.
BP spokesman Mark Salt said the company had nothing further to add to what she said about the cost of the oil spill response.
Cash raised from such fines would be funneled to the state pollution resources, economic support for hazardous materials spills to offer.
BP or other parties face higher fines, they can, or try to arrange with the government for a lesser amount. Another option would be for BP or other responsible parties to a far-reaching rules governing different areas of responsibility to search.
“The amount of barrels being released from the well is critical,” said Hester of the University of Houston.
Pressure on the government’s response to the disaster, President Barack Obama on Friday created a bi-partisan commission on the spill, and the board has undertaken to verify independently the extent of the oil spill in the Gulf. “We are not dependent on what BP is telling us,” Interior Secretary Ken Salazar told CNN last week.
Over a barrel
After previous oil spills, said experts, civil penalties have a modest percentage of the total liability exists, but they said that the size of the Gulf spill, the Government may lead to unprecedented punishment to seek.
It is customary for the government to wait for an oil spill clean-up is underway to pursue civil penalties, experts said. Authorities were accurate accounting of the spill volume is also needed before seeking fines.
Bernstein Research estimated late April that BP’s liability could reach eight billion U.S. dollars, but that figure does not take into account any penalties.
BP’s share price is paid by about 30 percent since the deadly explosions rocked Transocean Deepwater Horizon rig on April 20, clearing of an oil leak, that perhaps the greatest ecological disaster in American history.
EPA legal document leaked online and seen by Reuters shows the agency assessed civil penalties apply per barrel at BP for a 5000-barrel oil spill in Alaska’s Prudhoe Bay in 2006. The EPA and the U.S. attorneys declined to confirm whether the contents of the document, which was found on a website called whistleblower peer.org deny.
When the penalty was introduced in the Clean Water Act by Senator Joseph Lieberman 16 years earlier, he argued that the caps on the oil spill liability could lead to excessive risk taking.
“Large civil penalties … also especially important because in some cases, the liability for remediation Spiller under federal law is limited,” Lieberman said Congress in 1990, according to Congressional records. “Aggressive penalties may be necessary to compensate for this limited liability,” he told the Congress at the time.
If BP spill estimated rate of 5,000 barrels per day is correct, the responsible parties face civil fines between $ 5,500,000 and $ 21,500,000 per day, depending on the level of negligence.
BP Net profit in the first quarter of 2010 approximately $ 6,700,000 per day. Other companies may share the responsibilities and face some of the civil penalties, attorneys said.
“I would expect the government to go after BP and other parties for the maximum civil penalties,” said William Bode, managing partner at the law firm of Bode & Grenier in Washington. “The case could be accommodated in a Louisiana court where it would probably succeed, although it can be solved for less than the maximum.”
Any gross negligence verdict against BP or others may depend on whether the companies were aware that they take unnecessary risks in the Gulf, lawyers said.
“If a driller and BP knew or should have known about a condition that could lead to a disaster, it could face serious negligence,” said a lawyer and insurance company that does business with BP and asked not to be named.
If the government pursues civil penalties based on the quantity of oil spilled, it would take it into consideration and made their best to the leakage limit, and their history of criminal offenses, if any, and whether they can cost from fines shall, among other factors, experts said.
BP was the third largest criminal fine of $ 50,000,000, for an environmental crime in American history for a refinery in Texas City fire in 2005. BP subsidiaries remain under federal probation for prior offenses in Texas and Alaska.
“There’s only so much you can get blood from a stone” Uhlmann said. “Bankruptcy I do not think BP will be the objective.”
source:reuters
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