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BP denies city's oil spill damages claim, officials promise fight

GULFPORT — BP has told the city of Gulfport it has no documents to support a claim for $11.8 million in compensation for community damages from the Deepwater Horizon oil-rig explosion and spill.

Specifically, the Sun Herald reports BP says the city failed to document any sales or property tax losses from the oil spill through the height of the 2010 tourist season. The city sought almost $4.2 million in lost sales taxes, $1.5 million for property taxes and $6.1 million in “community damages.”

The Sun Herald reports that the city released the Dec. 13 letter yesterday at the newspaper’s request.

City officials hope the claim can be settled without a lawsuit.

“They’re taking a tough position,” city council president Ricky Dombrowski said. “We’re just going to continue to push them. How could (the claim) be worth zero when it was originally worth $76,000? I think they’ve just drawn a line in the sand.”

BP initially offered the city $76,000 for tax losses, but the city previously rejected that offer.

BP has paid only two loss-of-revenue claims to local governments in Mississippi, BP spokesman Ray Melick said. BP records show the city of Moss Point was paid more than $57,000, while the city of Ocean Springs received almost $133,000. Melick said a total of 60 loss-of-revenue claims have been paid to governments along the Gulf of Mexico.

In its letter to Gulfport, BP said the city failed to follow the accepted methodology for calculating its sales-tax losses and failed to document a loss of property taxes. The letter also cited other issues with the city’s methodology.

The city also asked for future sales and property tax losses the federal Oil Pollution Act does not cover, the letter said.

“OPA contemplates payment for actual damages suffered by a government entity as a result of an oil spill,” said the letter, signed by claims vice president Geir Robinson. “Attempts to project prospective future losses related to the spill are purely speculative and therefore not recoverable under OPA.”

The city is unable to recover lost gaming revenue, the letter said, because “gaming does not involve a natural resource or the right to use a natural resource.”

BP also said the Oil Pollution Act does not pay “community damages” to government entities. Instead, damages to natural resources will be covered through OPA’s natural resource damage assessment process, with the Mississippi Department of Environmental Quality designated as the trustee for the federal government in restoring those resources.

In a separate oil spill-related item, equipment maker Dril-Quip Inc. says a federal judge found it didn’t contribute to the Deepwater Horizon disaster.

Dril-Quip, which makes offshore drilling equipment that was on the rig at the time of the blowout, said today that U.S. District Judge Carl Barbier dismissed all claims against the company.

The company said the judge ruled last Friday that Dril-Quip’s equipment didn’t appear to be connected to the well blowout on April 20, 2010.

The well, which was owned by BP PLC, Anadarko Petroleum Corp. and MOEX Offshore 2007 LLC, created the worst offshore oil spill in U.S. history.

BP expects to spend more than $40 billion to clean up the spill and repair damages. It asserts that other contractors including service company Halliburton Co. and rig owner Transocean Ltd. contributed to the disaster. Civil and criminal investigations are still working to determine who is responsible.

Its shares finished at $66.42 yesterday. That is midway between its 52-week low of $47.40 set in early August and its high of $82.49 in mid-February of 2011.

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