BP and Anadarko were looking to skirt past the federal pollution law.
The U.S. Supreme Court has thrown cold water over BP Plc. (NYSE:BP) and Anadarko Petroleum Corp.'s bid to drop penalties under the federal government's pollution law in relation to the Gulf Of Mexico oil spill five years ago.
This means that the two oil companies will have to live with the June 2014 ruling dished out to them by the New Orleans-based 5th U.S Circuit Court Of Appeals, which makes the two oil majors liable to pay civil penalties under the Federal Water Act.
BP is currently facing a maximum fine of less than $14 billion under the act, whereas Anadarko is required to simply pay no more than a billion dollars, yet it is still asking for a reprieve. The cases are "BP Exploration and Production Inc. v. U.S. and the Anadarko Petroleum Corp v. U.S., U.S. Supreme Court, and No are 14-1217 and 14-1167."
Carl Barbier, US District Judge in New Orleans, is yet to impose any new penalties but has ruled that BP has been grossly negligent since it was the operator of the rig and it did not take action fast enough to shut the estimated 3.2 million barrels of oil that was spilled. Overall, BP has to incur at least more than $40 billion for the spill, and includes cleanup, as well as fines and compensation, for victims affected by the spill.
Even though Anadarko and BP own 25% and 65% of the Macondo well, the companies argue that they are not liable for their involvement for the oil spill that came as a result an equipment, which caved in on the drilling rig that was owned by Transocean Ltd. Therefore, the companies argued that the rig's owners should be the only companies to pay. However, the court stated that being co-owners of the well, BP and Anadarko are on the hook for penalty. Transocean agreed to pay the US Government more than a billion dollars of civil penalties for the spill.
BP stock price ended the day at $40.29, a drop of more than 2% since the previous day on the ruling that is likely to cost it valuable time and money to focus on other ventures than on maintaining the cleanup. It also comes as the UK oil and gas major has reportedly offered to buy Penn Virginia for $8 a share. The value is estimated at less than $575 million with an 80% premium, but Penn Virginia has rejected the offer.