* Experts note high per-barrel penalty
* Practice of invoking range of laws bad sign for BP
By Tom Bergin
LONDON, May 4 BP Plc's (BP.L) $85 million
settlement with the U.S. Dept. of Justice for oil spills in
Alaska in 2006 suggests the government will push for higher than
expected fines related to the Gulf of Mexico oil spill.
Legal experts said the size of the $25 million penalty
levied as part of the deal, when calculated on a per barrel of
oil spilt basis, and the DoJ's willingness to invoke a raft of
legislation to threaten BP, set a bad precedent for BP.
"The per barrel calculus is really sort of a way of
communicating to the public that the Obama administration is
very serious about this stuff," said Zygmunt Plater, Professor
of Law at Boston College Law School.
BP has indicated it will face fines of under $5 billion
related to the 2010 oil spill, rather than the around $21
billion it could face if it was found guilt of gross negligence
-- a position that most analysts have accepted.
However, if the Alaska settlement is a template, BP could
end up paying out well in excess of $21 billion, as the spill at
Prudhoe Bay in 2006 was dwarfed by the nearly 5 million barrels
spewed from BP's ruptured Macondo well last summer.
The two Alaska spills led to 5,078 barrels of crude spilling
on the Tundra, the DoJ said, and the $25 million civil penalty
BP was forced to pay, equates to over $4,900 per barrel.
The DoJ said it was the largest per-barrel penalty to date
for an oil spill, although BP denied the penalty was assessed on
a per barrel basis.
BP has also agreed to spend an additional $60 million in
improving safety. [ID:nN0383425]
These amounts are on top of a $12 million criminal fine, and
$8 million in other penalties levied in 2006 for the same
The $25 million penalty alone equates to over $4,900 per
barrel, as against to a maximum $4,300 per barrel fine
applicable under the Clean Water Act -- the main statute that
covers oil spill -- penalties.
The DoJ invoked the Clean Water Act, the Clean Air Act and
the pipeline safety laws in the settlement and Plater said this
willingness to throw every weapon in the legal toolkit at BP was
a departure from the policy of the previous U.S. Administration.
However, some analysts denied there was any read across
between the two situations.
"Just because you're grossly negligent in Alaska doesn't
mean you're grossly negligent in the Gulf of Mexico," said Iain
Armstrong at Brewin Dolphin.
BP shares traded down 1.45 percent at 1324 GMT on Wednesday,
against a 1.75 percent drop in the STOXX Europe 600 Oil and Gas
(Reporting by Tom Bergin; Editing by Hans Peters)