BP has reimbursed $518 million to U.S. for oil-spill cleanup in Gulf of Mexico


BP has reimbursed the federal government $518 million for cleanup costs for the April oil spill in the Gulf of Mexico, congressional auditors said, but those costs have already hit $581 million and are still growing.

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 cleanup 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 the amount 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 not only to lift it but to 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 an assessment of those costs has only just begun.

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. Sen. Thomas R. 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 efforts – involving the Coast Guard, the Environmental Protection Agency, the Interior Department and other agencies – nor its oversight of the claims process or how well that process is working. Those are the subject of another audit that should be released this spring, said Susan Ragland, who is in charge of the GAO’s financial management reports.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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