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BP pays $518 million for oil-spill cleanup

By Lisa Rein and Ed O'Keefe

Eye Opener

BP has reimbursed the federal government $518 million for clean-up costs for the April oil spill in the Gulf of Mexico, a sum that has hit $581 million and keeps growing, congressional auditors said.

The Government Accountability Office, in a report on the spill released Friday, reviewed the financial risks facing a trust fund Congress authorized in 1990 after the Exxon Valdez incident to pay clean-up expenses incurred by federal agencies. The pot of money, called the Oil Spill Liability Trust Fund, is financed by an 8-cents-per-barrel tax on petroleum.

Auditors said there was about $1.6 billion in the fund as of the end of September. But to limit the government's exposure, the law caps at $1 billion what agencies can draw from it for cleanup costs -- even if the oil company responsible for a spill pledges to reimburse the government for all costs. The fund is at risk in the near future of reaching the limit of what the government can spend, the GAO said.

Congress is considering legislation to lift the $1 billion cap. Auditors urged Congress to not only lift it but consider changing the rules so that money already reimbursed by BP is not counted against the limit.

The oil-spill fund is separate from $20 billion set aside by BP to reimburse businesses and residents of the Gulf region whose livelihoods were hurt by the blowout on the Deepwater Horizon drilling rig.

BP also has pledged to pay the potentially massive costs of restoring the Gulf region to health. But that assessment has only just begun and its costs are far from being tallied.

Auditors concluded that the lingering uncertainty over the cost of the cleanup -even though BP has pledged to foot the bill--still poses financial risks to the government.

"The full extent of such costs and the extent to which they will ultimately be paid by the responsible parties or federal, state and local governments is unknown at this time," auditors wrote. "Financial risks to the federal government exist if circumstances occur that adversely impact BP or other responsible parties' financial condition or ability to pay such claims."

Auditors concluded that "it remains unclear" whether the government will ultimately have to cover any spill-related costs and how big they could get.

The GAO report was requested by several senators serving on committees addressing federal financial management. Senator Thomas E. Carper (D-Del.), chairman of such a panel on the Senate Homeland Security and Governmental Affairs Committee, said in a statement:"Although the BP/Deepwater Horizon well has been sealed and the oil clean-up process continues to progress, the federal government must continue to be vigilant in ensuring that every dime spent by taxpayers is reimbursed by those responsible.

The GAO did not assess the effectiveness of the government's cleanup effort, its oversight over the claims process or how well its is working. That's the subject of another audit that should be released this spring, said Susan Ragland, who is in charge of the agency's financial management reports.

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By Lisa Rein and Ed O'Keefe  | November 15, 2010; 6:00 AM ET
Categories:  Eye Opener  
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Comments

The Oil Spill Liability Trust Fund

On October 18, 2010, The Donovan Law Group sent a letter to the Honorable Janet Napolitano, Secretary of the Department of Homeland Security, asking the Secretary to immediately request the Attorney General, pursuant to 33 U.S.C. § 2715, to commence an action against BP on behalf of the Oil Spill Liability Trust Fund (the “Fund”) to recover any compensation paid by the Fund to any claimant pursuant to OPA.

The full text of the letter is available at:

http://donovanlawgroup.wordpress.com/2010/10/29/bp-oil-spill-letter-requests-secretary-napolitano-to-take-action/

Posted by: brianjdonovan | November 15, 2010 6:13 AM | Report abuse

Any chance we could settle out of court for say.........$25 trillion.

It would really help our national budget problems and you know there are terrific profits in oil so they will make it up in no time!

Posted by: tjmlrc | November 15, 2010 8:02 AM | Report abuse

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Posted by: itkonlyyou382 | November 15, 2010 8:36 AM | Report abuse

That's goood business!
BP causes damage estimated at 6 billlion dollars, crewing up countless small businesses, destroys de ecology valued in trillions of dollar....and it only gets to pay $510 devalued millions.
Free enterprise at its best!
We should apologize to BP, like that Republican imbecile did, and pretend notjing happened.

Posted by: analyst72 | November 15, 2010 9:38 AM | Report abuse

I thought we were supposed to call them BRITISH Petroleum.

Posted by: getjiggly1 | November 15, 2010 10:53 AM | Report abuse

As Republicans have told us, HOW DARE we make BP pay for what they did! What a "shakedown"!

Posted by: Bious | November 15, 2010 1:39 PM | Report abuse

Beefeaters!

Posted by: getjiggly1 | November 15, 2010 3:29 PM | Report abuse

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