BP fails in attempt to reduce Macondo oil spill penalty

BP’s attempt to reduce a maximum fine for the Deepwater Horizon oil spill under the Clean Water Act has fallen on deaf ears.

In a ruling brought by the U.S. District Court Eastern Disctrict of Louisiana, Judge Barbier agreed with the U.S. government’s position that the maximum penalty should be $4,300 per barrel of oil discharged. BP asked for $3000 per barrel.

Under the Clean Water Act which prohibits the discharge of “harmful” quantities of oil offshore, the maximum civil penalty is $1000 per barrel discharged. However, if the discharge resulted from gross negligence or willful misconduct, the maximum penalty rises $3,000 per barrel.

Inflation Adjustment

BP had hoped it would get to pay $3000 per barrel, as the court previously ruled that BP committed a series of negligent acts or omissions that resulted in the discharge of oil, which together amount to gross negligence and willful misconduct under the CWA.

However, the reason the U.S. Government has asked for more than $3000 is inflation adjustment.

As previously said, the maximum amount of the civil penalty under the CWA, as enacted in 1990, is $3,000 per barrel for violations resulting from gross negligence or willful misconduct.

Since 1997, the Environmental Protection Agency (“EPA”) has promoted regulations aiming to raise this amount. At the time of the Macondo well oil spill, the EPA had set the maximum civil penalty at $4,300.

Jurisdiction dispute

While BP does not dispute that the EPA’s calculations were correct under the Inflation Adjustment Act, it said that EPA didn’t have the authority to inflate the penalty, but the Court disagreed.

In his ruling Judge Barbier said :“The Court finds that the EPA’s regulation….adjusting the civil penalty…is valid and that the maximum CWA civil penalty that may be imposed against BPXP is $4,300 per barrel of oil discharged.”

To remind, United States District Court for the Eastern District of Louisiana in January said that for purposes of calculating the maximum possible civil penalty under the CWA it found that 3.19 million barrels of oil discharged into the Gulf of Mexico during the three months oil was flowing freely into the ocean from the Macondo well in 2010.

This now means that BP is facing a maximum civil penalty of of $13.7 billion.

Offshore Energy Today Staff

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