Feb 5 BP Plc has tallied up claims made
by states and local governments on the U.S. Gulf Coast for
economic and property damages from the Macondo oil spill, and
come up with a figure of $34 billion, which it deems
The company has struggled with political, financial and
legal fallout ever since the April 2010 explosion, which caused
the worst offshore oil spill in U.S. history.
The $34 billion total, provided for disclosure reasons with
the company's financial results on Tuesday, is based on claims
made last month by Alabama, Mississippi and Florida as well as
claims made by Louisiana and others from local governments, BP
Citing the Oil Pollution Act (OPA) underpinning the claims,
the company said it considers the methods used to calculate them
to be "seriously flawed, not supported by the legislation and to
substantially overstate the claims."
BP Finance Director Brian Gilvary explained that proving a
loss of tax revenue by these governments would be especially
difficult given that BP's response to the 2010 spill led to
40,000 people being hired and increased taxes paid as a result.
"It would be a pretty hard case to prove that there was
actually a loss of tax revenue," Gilvary said.
Earlier on Tuesday, BP said that fourth-quarter profit fell
one-fifth from a year ago.
An inability to settle state claims would be a complication
for BP as it tries to avoid a related civil trial due to start
on Feb. 25, with separate talks also under way with the federal
government on a Clean Water Act liability ranging from $5
billion to $21 billion.
BP's top in-house lawyer, Rupert Bondy, said the company had
already provided a $42.2 billion assessment for all claims, and
a total of $37 billion has already been committed through
separate settlements. Bondy emphasized that BP would litigate
the $34 billion in state and local claims.
Louisiana and Alabama have been prominent in their public
demands for BP to pay its debt to the Gulf Coast.
Garret Graves, senior coastal adviser to Louisiana Governor
Bobby Jindal, called the $34 billion number "extraordinary,"
especially because it does not include state claims under the
Clean Water Act or the Natural Resource Damage Assessment
process of the OPA.
"Perhaps this helps BP to realize the size and scope of the
problems they have caused the citizens of the Gulf," Graves
said, though he cited "bright spots" such as tourism and seafood
safety agreements BP struck with the states, and BP's "early
restoration" agreement for the coast.
"They have continued to try to downplay the significance the
oil spill has had on us," he added. "BP hasn't done itself any
favors in gaining goodwill with anyone in the Gulf. With a few
exceptions early on, they have been incredibly difficult to deal
with and their credibility is subsurface."
A spokeswoman for Alabama Attorney General Luther Strange
did not have an immediate comment.
Transocean Ltd, owner of the rig destroyed in the
Macondo disaster, said on Tuesday it was still open to
negotiating any remaining claims against it beyond its $1.4
billion federal government settlement agreed a month ago.
But the company is also prepared to go to court.
"While litigation is always unpredictable and unpleasant and
uncertain, I can guarantee you we are ready to go to trial if we
have to," Chief Executive Steven Newman said at the Credit
Suisse Energy Summit in Colorado.
A hearing on Tranoscean's federal criminal settlement is set
for Feb. 14 in New Orleans. BP's criminal settlement, originally
agreed in November, was approved last week.
The civil case, with a trial set for Feb. 25, is In re: Oil
Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico,
on April 20, 2010, No. 10-md-02179, in the U.S. District Court,
Eastern District of Louisiana.