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How much should BP pay?

Posted March 05, 2013, at 4:03 p.m.

How much should BP pay for the carelessness that led to the disastrous Deepwater Horizon oil spill in 2010?

Last week the giant oil company, the federal government and some Gulf Coast states started wrangling over that question. The parties gathered in New Orleans to begin a federal civil trial, the first phase of a process that will determine the size of the Clean Water Act fines the company must pay.

If the court finds that BP was merely negligent, the company could pay as much as $3.5 billion in fines. If the judge finds that BP was grossly negligent, the company could have to pay as much as $17.6 billion.

Whatever the figure, it would be on top of the $20 billion to $30 billion that BP already has distributed or committed to pay.

BP is still liable to pay for the environmental injury it caused, according to the results of a process called the Natural Resources Damage Assessment. Gulf states also recently demanded a whopping $34 billion in economic damages. Given all of these, the Economist calculates, BP’s total Deepwater Horizon payout could reach an incredible $90 billion.

A bill anywhere near that large is impossible to justify.

BP must pay to clean up the environmental damage it did. This is important both to ensure that restoration efforts have the funding they need and to avoid encouraging others to take unwarranted risks.

But, in establishing BP’s punishment, federal and state governments shouldn’t try to extract excessive punitive fines. The principle of fairness does not justify treating the company like a piggy bank for gulf-state budgets, discounting the mobilization of men and money the company directed following the spill.

The Washington Post (March 4)

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