Judge Sets BP’s Maximum Fine 24 Percent Lower Than US Demand

A local law professor says a federal judge was wise to “pick a number” between opposing estimates of the oil spilled by BP at the Deepwater Horizon site in the Gulf of Mexico nearly four years ago.

In New Orleans, US District Judge Carl Barbier ruled Jan 15 that BP is responsible for losing 4.19 million barrels of oil into the Gulf, but reduced that to 3.19 million because of the amount of oil recovered after the accident. Federal prosecutors calculated the amount at 4.2 million barrels.

As a result, BP’s maximum penalty can be no greater than $13.7 billion under the penalties outlined by the federal Clean Water Act, 24 percent lower than the 18 billion being sought by the US Justice Department.

Related: BP, Another Victim Of Cheap Oil, To Cut Jobs Through 2015

In his 44-page ruling, Barbier complained that his decision was based on “voluminous, dense, highly technical and conflicting” evidence. For example, he wrote, “Both sides presented evidence to support their cumulative flow estimates, and each mounted effective attacks on the other’s calculations.”

As a result, he concluded, “There is no way to know with precision how much oil discharged,” and that he effectively split the difference, arriving at 4 million barrels. The judge gave no further explanation of how he arrived at that figure.

Edward Sherman, a professor of law at Tulane University who has followed the case, praised Barbier’s conclusion, saying, “[T]here’s no way to precisely find the numbers, so why not pick a number as he did, reasonably between the two numbers provided by the parties?”

Another legal scholar, David Uhlmann of the University of Michigan and the former director of the Justice Department’s environmental crimes decision, told Bloomberg News in an e-mail that the ruling was “a major victory for BP and reduces by billions their potential liability. … A fine in excess of $10 billion remains possible but is now less likely.”

BP, based in London, already has earmarked $3.5 billion to cover the fines related to pollution alone, and has spent an additional $28 billion in cleanup, spill response and claims from those whose businesses were hurt by the pollution of rich fishing waters. And in 2012 it settled an allegation of criminal liability for $4.5 billion.

Related: Good News For BP In Oil Spill Case

Geoff Morrell, a BP spokesman, issued a statement saying the British oil company shouldn’t be liable for the maximum pollution fine set by Barbier. “BP believes that considering all the statutory penalty factors together weighs in favor of a penalty at the lower end of the statutory range,” he wrote.

The ruling also affects Anadarko Petroleum Corp., which had a 25 percent stake in the well tapped by the Deepwater Horizon rig. Its liability had been $4.6 billion under the Clean Water Act, according to federal prosecutors. But under Barbier’s calculation, it now faces a fine of no more than $3.5 billion.

The fire and explosion on the Deepwater Horizon off the coast of Louisiana on April 20, 2010, killed 11 workers aboard the oil rig and caused the largest offshore oil spill in the history of the United States. Oil spewed from the undersea well for 87 days and fouled an estimated 68,000 square miles of rich marine habitat and some 500 miles of coast from Louisiana to Florida.

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:

• Oil Industry Withdraws From High Cost Areas
• Low Prices Lead To Layoffs In The Oil Patch
• Nigerian Oil Spills Will Cost Shell Over $63 Million