BP Begs for Lower Fine for Deepwater Horizon

The oil company is arguing that dropping oil prices will make it difficult for them to pay their impending fine.

BP, the ninth most profitable company in the world, is crying poverty. Lawyers for the oil giant were back in federal court on Tuesday to begin the penalty phase of the company's trial for the 2010 Gulf of Mexico oil spill. A judge has already determined BP was guilty of “gross negligence and willful misconduct.” Now the court will determine how much the company will be forced to pay for its part in the worst spill in American history. The Justice Department is currently seeking $13.7 billion dollars from BP, the maximum fine under the Clean Water Act.

But BP's lawyers asked the judge Friday to assess the penalty against BPXP, BP's exploration and production unit, rather than the parent company. From a business standpoint, it makes sense to ask: the Clean Water Act says that fines are determined, among other things, by the violator’s ability to pay. BPXP can afford to pay less than than BP Plc can, in part because, as BP lawyer Mike Brock noted on Tuesday, its value has plunged in the last six months due to falling gas prices. According to the Brock, BPXP is worth $5.1 billion today; it was valued at more than three times that a few months ago.

The fact that BP asked at all showed they were not taking full responsibility for the spill, Justice Department attorney Steven O’Rourke said in court on Tuesday: "BP's litigation position in this phase suggests that it still doesn't understand the gravity of what's happened here, they continue to focus on their own hardships rather than the hardships of the environment and the people."

Conservation groups, including the Environmental Defense Fund, National Wildlife Federation, Lake Pontchartrain Basin Foundation and National Audubon Society have urged the court to hold BP fully accountable for the spill. "The outcome from this decision must send a clear and powerful signal to every other operator in the Gulf: deep-sea drilling is risky business, and they must protect their employees, our communities and our ecosystems," the groups wrote in a joint statement released last week. "BP chose not to do that, so they deserve to pay the maximum fines allowed by law."

The government will justify its nearly $14 billion request by arguing that damage from the spill was not limited to wildlife alone, but reverberated throughout communities across the Gulf coast. University of Arizona School of Anthropology professor Diane E. Austin, testified for the government on Tuesday that the spill "caused serious and widespread sociocultural harm to coastal communities."

Austin's findings are based on interviews with more than 1,300 residents, The Times-Picayune reports. Besides the obvious impact to people including commercial fishers and the owners of grocery stores that supplied their boats, Austin found that even businesses with no discernable connection, like local florists, saw a sudden drop in orders after the spill.

The penalty phase is expected to last three weeks.