BP Denies Alabama Claim Over Oil Spill

September 17, 2010

BP Plc has turned down Alabama’s claim for $148 million in lost government revenue due to the worst oil spill in U.S. history, the state’s attorney general, Troy King, said Friday.

BP denied the claim because it said there was ongoing litigation but in fact the energy giant was “playing games” with Alabama and other states on the Gulf of Mexico coast, King said in an interview.

“They (BP) said they wouldn’t discuss it (the claim) because there is litigation. They are playing games in my opinion. BP is taking advantage of the fact that states are in a budget crisis and they are doing a masterful job,” King said.

There was no immediate comment from BP.

King’s comments form part of a growing dispute over how states, individuals and businesses in Louisiana, Mississippi, Alabama and Florida should be compensated for losses suffered as a result of the spill.

BP has set up a $20 billion compensation fund administered by lawyer Kenneth Feinberg to handle claims but a plethora of lawsuits has also been filed against the company.

Alabama’s losses stem from diminished sales, lodging and fuel tax revenues as tourists avoided the state’s coast this summer because of the spill that spewed millions of gallons of oil into the Gulf between April and July.

The well is due to be finally killed this weekend.


Total losses will eventually amount to much more than $148 million and, when compared with calculations other coastal states made about their own losses, Alabama’s claim was inadequate, said King.

King claimed damages in August from BP in a lawsuit that will be added to the multi-district litigation that has been consolidated in federal court in New Orleans, he said.

But King’s decision over the suit sparked a clash with Alabama Governor Bob Riley who disputes the need for litigation at this point as a means to rectify the state’s losses.

In claiming damages, “Governor Riley embarked on a process that was doomed to fail. I don’t know why anybody is surprised that BP strung him along and refused to pay his claim,” King said.

For his part, Riley blamed King’s lawsuit for BP’s decision Thursday to turn down the claim and said that as a direct consequence he was forced to increase proration for the education budget by 2 percent.

Some $116 million of the $148 million claimed was earmarked for the state’s Education Trust Fund in order to prevent the need for $113 million in spending cuts, but now those cuts would take place, Riley said.

“If that lawsuit hadn’t paralyzed our negotiations, we wouldn’t have to make these additional cuts to education funding,” said Riley in a statement.

“One man made a brash, reckless decision to sue BP while the state was still working to recover lost tax revenue from the company,” Riley said.

Even so, BP should have lived up to its obligation as the responsible party despite the lawsuit, said Riley, who added that while a lawsuit against BP was premature it should remain an option for possible future use.

(Reporting by Matthew Bigg, editing by Matthew Lewis)

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