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Fine at issue as BP says government overstated volume of oil spilled

WASHINGTON — BP mounted a new challenge to 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 by billions of dollars the federal pollution fines it faces for the largest offshore oil spill in history.

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 comments the company submitted to the commission in October that were obtained by the Associated Press on Friday, BP says that the government's spill estimate of 206 million gallons is "overstated by a significant amount" and that any consensus around that number is premature and inaccurate.

"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."

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 money BP pays for fines for the gulf's coastal restoration.

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 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 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.

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.

Initially, federal officials adopted BP's estimate that 42,000 gallons each day were gushing out. They raised it to 210,000 gallons per day and stuck with that number for weeks.

In mid June, about two months after the oil rig accident that caused the deepwater gusher, the federal government said the well could be leaking as much as 2.4 million gallons a day.

The latest version estimates that soon after the April 20 explosion, oil was spewing out of the well at a rate of 2.6 million gallons a day. That rate slowly dropped as the oil and gas reservoir more than 3 miles below the water's surface was depleted. At the time the well was plugged in mid-July, the government assumes oil was flowing at 2.2 million gallons daily.

Fine at issue as BP says government overstated volume of oil spilled 12/03/10 [Last modified: Monday, November 7, 2011 1:26pm]
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