BP Challenge to Oil Spill Could Slash Fine!

BP is challenging the U.S. government’s estimates of how much oil flowed from the runaway well deep below the Gulf of Mexico, an argument that could reduce the federal pollution fines it faces for the largest offshore oil spill in history by BILLIONS! Read the full story after the jump…
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BP’s lawyers are arguing that the government overstated the spill by 20 to 50 percent, staffers working for the presidential oil spill commission said Friday. In a 10-page document obtained by The Associated Press, BP says the government’s spill estimate of 206 million gallons is “overstated by a significant amount” and the company said any consensus around that number is premature and inaccurate.

The company submitted the document to the commission, the Justice Department and the National Oceanic and Atmospheric Administration.

“They rely on incomplete or inaccurate information, rest in large part on assumptions that have not been validated, and are subject to far greater uncertainties than have been acknowledged,” BP wrote. “BP fully intends to present its own estimate as soon as the information is available to get the science right.”

In a statement Friday, the company said the government’s estimates failed to account for equipment that could obstruct the flow of oil and gas, such as the blowout preventer, making its numbers “highly unreliable.”

BP’s request could save it as much as $10.5 billion or as little as $1.1 billion, depending on factors such as whether the government concludes that BP acted negligently. For context, the U.S. Environmental Protection Agency’s entire federal budget for 2010 was $10.3 billion. President Barack Obama has said he wants Congress to set aside some of the money BP pays for fines for the Gulf’s coastal restoration. Louisiana lawmakers are pushing legislation that would require at least 80 percent of the civil and criminal penalties charged to BP, and possibly other companies, to be returned to the Gulf Coast.

William K. Reilly, co-chairman of the presidential commission, expressed amazement at BP’s case Friday. Reilly headed the Environmental Protection Agency under President George H.W. Bush.

“They are going to argue that it is 50 percent less” than the government’s total? Reilly asked. “Wow.”

Under the Clean Water Act, the oil giant – which owned and operated the well – faces fines of up to $1,100 for each barrel of oil spilled. If BP were found to have committed gross negligence or willful misconduct, the fine could be up to $4,300 per barrel.

That means that based on the government’s estimate of 206 million gallons, BP could face civil fines alone of between $5.4 billion and $21.1 billion.

“They are going to argue it was less,” said Priya Aiyar, the commission’s deputy chief counsel. “BP has not offered its own numbers yet, but BP has told us that it thinks the government’s numbers are too high and thinks the actual flow rate can be actually 20 to 50 percent lower.”

Rep. Edward J. Markey, D-Mass., a member of the House energy panel that is investigating the spill, said in a statement Friday to the AP that BP has done whatever it could to avoid revealing the true flow rate of the spill.

“With billions of dollars at stake, it is no surprise that they are now litigating the very numbers which they sought to impede,” Markey said. “The government engaged independent scientists and multiple techniques to arrive at their estimate. Additional independent peer-reviewed studies have corroborated their estimate. BP has a high bar to meet to overturn this estimate.”

BP’s argument could be bolstered by the federal government’s missteps in coming up with a final estimate for the spill’s volume. The Obama administration has offered nearly 10 estimates of how much oil flowed from the BP well, coming up with a refined conclusion late last month of 206 million gallons, which is likely its last.

Internal documents released late Friday under the Freedom of Information Act show that the White House was intimately involved in deciding how scientific information was portrayed to the public, particularly when it came to the August 4 release of a document that showed where the spilled oil had gone. The five-page report, which was touted by Carol Browner, the president’s energy adviser, on morning talk shows and at White House press briefing showed that half the oil was gone – either from evaporation, burning, skimming or recovery at the well head.

The 3,500 pages of documents reveal that the administration wanted the oil budget to show its efforts to respond to the disaster were working, despite objections from top EPA officials, including Administrator Lisa Jackson, over how some of the data was presented.

An earlier version of the press release issued with the paper said that 33 percent of the oil released was captured or mitigated by recovery efforts.

A final version, changed hours before its release, said “the vast majority” of the spilled oil was addressed by recovery efforts or had naturally dispersed or evaporated.

That morning, Browner appeared on national television saying that an initial assessment by federal scientists showed “more than three-quarters of the oil is gone.”

In an e-mail sent later that morning addressed to Browner’s assistant, Heather Zichal, NOAA chief Jane Lubchenco finds fault with the White House’s interpretation of the report’s numbers and attribution of the report solely to NOAA. The report was drafted by several agencies.

“I’m concerned to hear the oil budget report is being portrayed as saying that 75 percent of the oil is gone and that this is a NOAA report,” Lubchenco writes. “Please help make sure that both errors are corrected.” The White House acknowledged Browner had misspoke.

Lubchenco explains it was only accurate to say half the oil was gone.

–hp