Special Report - BP oil spill a gusher for lawyers

Wed Jun 30, 2010 12:36pm GMT

By Jonathan Stempel

NEW YORK (Reuters) - From a legal perspective, BP's Deepwater Horizon blowout and the 1989 grounding of the Exxon Valdez are in many respects night and day.

"The Gulf is seen to be a systemic breakdown," said Zygmunt Plater, a professor at Boston College Law School and former chairman of the Alaska Oil Spill Commission's legal task force after the Valdez disaster. "It's not just one guy who had some drinks."

That was a reference to Joseph Hazelwood, the Valdez captain who admitted to drinking vodka before the spill. He was convicted of negligent discharge of oil, a misdemeanour, and sentenced to 1,000 hours of community service.

The closest analogues in the United States may be the litigation over asbestos, which analysts have estimated has cost between $250 billion (166 billion pounds) and $300 billion, and tobacco, whose bill is hard to determine given the many pending cases.

But the Valdez disaster, which caused roughly 257,000 barrels, or 10.8 million gallons, to spill off the Alaska coast, does offer a glimpse into what analysts widely expect to be a gruelling and extremely costly legal marathon for BP.

Litigation dragged on for two decades as Exxon Mobil Corp fought over punitive damages, saying the $5 billion that an Alaska jury awarded in 1994 was excessive. A federal appeals court later cut that to $2.5 billion, and in 2008 the U.S. Supreme Court slashed it to $507.5 million.

Exxon's costs for the Valdez are now estimated at roughly $4 billion. This includes more than $2 billion for cleanup, a $900 million civil penalty, a $125 million criminal penalty, and just over $1 billion for litigation with victims.

BP will surely pay more -- a lot more.   Continued...

<p>A substance is seen smeared on the sign of a BP gas station along Houston Street in New York, June 1, 2010. REUTERS/Shannon Stapleton</p>
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