BP Balks at Oil Spill Monies Sought by States

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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 “substantially” overstated.

The $34 billion total 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 said.

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.

An inability to settle state claims would be a complication for BP as it tries to avoid a related civil trial that was 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 Gov. 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.