BP Says U.S. Withholding Evidence of Extent of Oil Spill

By Joe Schneider – Mar 30, 2012 4:00 AM ET

BP Plc (BP/) said the U.S. government is withholding evidence that would show the oil spill from the Macondo well in the Gulf of Mexico was smaller than claimed.

BP has identified 10,000 documents, out of more than 80,000 the government has sought to suppress, that relate to estimates of the April 2010 spill, the London-based oil producer said in a court filing yesterday in federal court in New Orleans. The U.S. estimated in August 2010 that 4.9 million barrels of oil, plus or minus 10 percent, spilled into the Gulf after a rig exploded.

BP said March 2 it would pay an estimated $7.8 billion to resolve private plaintiffs’ claims for economic loss, property damage and injuries. The settlement, to be paid from a $20 billion trust set up in 2010 for spill victims, doesn’t resolve federal and state government environmental damage claims. BP has set aside $37 billion to cover spill costs.

“Despite the United States’ declaration that it was ‘ground truth,’ the Aug. 2 estimate was in fact the fourth official estimate” to be released, London-based BP said in the U.S. court filing.

BP spokesman David Nicholas declined to immediately comment. A call to the U.S. Justice Department’s press office wasn’t immediately returned.

U.S. Attorney General Eric Holder said Feb. 28 that the U.S. has a “strong” case over liability for the explosion that ripped through the Deepwater Horizon drilling rig, killing 11 workers and triggering the biggest U.S. offshore oil spill.

Potential Fines

BP may face as much as $17.6 billion in civil pollution fines under the U.S. Clean Water Act, based on the government’s estimate of barrels spilled.

“The United States is using a privilege intended to protect discussions and deliberations in advance of policy determinations to shield documents reflecting discussions and deliberations concerning a factual issue, the amount of oil discharged,” the London-based energy company said.

The law provides for fines of as much as $1,100 for each barrel of oil spilled as a result of simple negligence, often described as a failure to exercise ordinary care. The maximum fine would increase to $4,300 a barrel if BP or the other defendants are found to have been grossly negligent, meaning a conscious action or omission caused the spill.

BP said “fundamental fairness” requires the disclosure of documents that may help it in its defense.

“It is the United States that has brought this case, seeking large monetary penalties against BP,” the oil company said. “When the government seeks relief, it is fundamentally unfair to allow it to evade discovery.”

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net