After months of technical setbacks, embattled BP (NYSE: BP – News) in early August was finally on the verge of capping its runaway Macondo well, the source of the largest oil spill in U.S. history. Even as the center of the oil giant shifts toward the massive reorganization of the Gulf of Mexico, now faces costly civil fines it faces as a result of the disaster.
BP could face as much as 17.6 billion U.S. dollars in civil penalties, based on a federal panel of experts’ estimation on August 2, approximately 4.1 million barrels of oil leaked from the well in the Gulf. Although environmental lawyers say BP is likely to negotiate a lower penalty, fines could still fold the company to pay for clean up costs, force it to sell more assets, and cut into future investment plans of incoming Chief Executive Officer Robert Dudley.
BP makes the Clean Water Act, as owner of the oil, liable for a fine of $ 1,100 per barrel spilled, even if it did nothing wrong, says Wayne State University law professor Noah Hall in Detroit. The penalty jumps to $ 4,300 per barrel if BP was grossly negligent. Hall says gross negligence in a civil case would include making “conscious decisions” that increased the likelihood of an incident, while in a risky business, such as deep water drilling.
Carl-Henric Svanberg BP chairman told Bloomberg Television on July 27 that it did not think it will be found grossly negligent, or given the sole responsible party for the spill.
Hall said the fine was ultimately not likely “something like” 17.6 billion U.S. dollars, because maximum BP and the government have a mutual interest in a lower number. “Both the federal government and a judge will take into account that BP has spent or will spend billions to clean up and cleaning up the spill,” he says. “At one time, BP says,” If you hit us with the ceiling of the penalties, plus $ 20 billion in cleaning and 20 billion U.S. dollars in claims, you will push us into bankruptcy. ” The federal government does not want to push BP into insolvency. ”
The civil fines under environmental regulations in the U.S. laws are separate from the costs faced by BP to clean up the spill and compensate victims of the disaster. Last month, BP took a 32.2 billion U.S. dollars to offset the cost of cleaning up and compensation, and estimation of possible sanctions. The company has already paid more than $ 4 billion in spill-related costs.
BP has a 20 billion U.S. dollars escrow fund to the remaining claims of individuals and businesses affected by the spill to pay. For those not in an escrow account payment, claims will be handled in more than 300 proposed class actions and shareholder suits related to the leak. The company may also be liable for civil penalties for violations of other environmental legislation, including the Endangered Species Act. This law imposes a fine of up to $ 25,000 per animal slain by the oil, some not yet estimated.
The U.S. Justice Department investigates whether criminal or civil laws were broken before the explosion, Attorney General Eric Holder said in June. The government would pursue penalties under civil and criminal laws, as it did when it claimed BP released more than 5000 barrels in two releases of the Prudhoe Bay (Alaska) field in 2006. Gregory Evans, a Los Angeles lawyer who suspects the environment represents disputes, says BP can probably fines from the Deepwater Horizon incident limit by cooperating with investigators probing the cause of the explosion and the extent of the spill .
Evans says that the estimate of Macondo spill scientific panel of the government is likely just “a starting point” for negotiations between BP and the government. “It is not BP or any other potentially responsible parties will close contest … with reliable, independent investigations, “he says. Indeed, BP spokesman Daren Beaudo warned after finding the panel that” there will always be uncertainty in all windows if the stream can not be directly measured. ”
BP is the major concern for avoiding a gross negligence finding by a court. Besides the $ 4,300 threshold for per-barrel maximum fine, such a ruling would also bar the BP search for good contributions from partners, Anadarko Petroleum (NYSE: APC – News) and a unit of Japan’s Mitsui Oil Exploration . Both have already shown reluctance to parts of the installation of clean-pay. “Gross negligence of the limited partners to protect,” says Hall. Some lawyers believe BP’s desire to keep its partners on the hook to share in any penalties the government increases leverage in negotiations with the company. “You do not have to be bad that the standard of gross negligence” in civil law, says Hall. It is only necessary to prove “that they engaged in risky business and made some bad decisions.”
Houston lawyer David H. Berg, who often complains polluters on behalf of municipalities, said: “There is zero chance” of the U.S., the maximum civil penalty to be imposed on BP. Berg BP figures should expect to fines of $ 3 billion to 5 billion U.S. dollars to pay because it has a record of compliance with environmental law issues, including earlier settlements in Alaska and another incident in Texas. Hall, however, predicts civil fines on BP would be lower, only about $ 1 billion to 2 billion U.S. dollars. “That would not (yet) to allow Obama and the Interior Dept. to say that they forced the largest fine ever,” he says.
The bottom line: BP, a 17.6 billion U.S. dollars maximum fine for the civilian Gulf spill faces a much lesser sentence is likely to negotiate.
source:yahoo news
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