While researching an article on Oilpatch Socialism in Louisiana, I stumbled across a law firm's blog that suggests why BP has no real interest in determining the actual amount of oil gushing from the floor of the Gulf of Mexico.
In a Thursday post on that blog, attorney Charles Lavis says the amount of penalties BP faces for violating the Clean Water Act are directly tied to the amount of pollution released in the incident.
The short post is quoted after the jump.
§ 1321 of The Clean Water Act of 1990 (33 USC § 1251 et seq.) is the main section of the Act outlining the liability of offshore facilities. This section provides, among other things, that there should be no discharge of oil and also sets forth the owner/ operator's liability including penalties for discharge of up to $1,000 per barrel of oil discharged ($3,000 per barrel of oil discharged in the event of gross negligence).
Penalties are capped at $50 Million unless the operator/operator is grossly negligent. Under this gross negligence scenario, BP's potential penalty liability under the Clean Water Act of 1990 could be as high as $180 Million Per Day. This penalty is in addition to other damages owed. The penalty calculation of $180 Million Per Day assumes a discharge of 60,000 barrels per day and a $3,000 per barrel penalty. The present estimated flow of 5,000 barrels per day may be a gross underestimate. BP, despite having the ability to obtain a very accurate flow rate through ultrasound, does not want a more accurate measurement according to recent reports.
Oh, that explains it. It's not that they're too busy trying to plug the leak. It's that if a more accurate estimate on the amount of oil being spilled was known, it would cost BP a lot more money than they are already on the hook for.