Who Will Pay the Price for Gulf of Mexico Oil Spill? It's Complex

"As the price tag for what could be the modern world's largest man-made oil spill continues to mount, navigating the complex path towards determining who will foot the bills resulting from the Deepwater Horizon accident could become as difficult as avoiding the oil plume in the Gulf of Mexico.

BP estimated on Monday that it already had spent $625 million on responding to the disaster. That includes payments to hundreds of affected fishers, millions in state grants for tourism and seafood promotion, and costs associated with reducing the flow of oil from the broken riser at the mile-deep wellhead and drilling of two relief wells to permanently seal the original well.

Under a complex matrix of federal and state laws, BP's expenses will continue for years, whether or not the company lives up to the promises repeated by CEO Tony Hayward that the company would pay "legitimate claims" from people who lose their livelihood as a result of the spill.

In a May 10 letter to the attorneys general of the five Gulf Coast states, BP's top U.S. lawyer John Lynch Jr. wrote that it "is BP's position that the cap on liability under the Oil Pollution Act is not relevant; BP will pay necessary clean up costs associated with the spill and legitimate claims for other loss and damage."

However, other companies that may have some role in the spill already have filed for liability protection in court. Transocean, which owns the sunken Deepwater Horizon rig, on May 13 asked a federal judge in Houston to limit its liability from the accident to $27 million, based on an 1851 law that says the owner of a sunken vessel is liable only for its value."

Mark Schleifstein reports for the New Orleans Times-Picayune May 22, 2010.

Source: New Orleans Times-Picayune, 05/24/2010