Ahead of Trial, BP Talks Settlement in 2010 Oil Spill!!!

Lots of drama taking place behind and in front of the scenes as the BP civil trial in New Orleans over damages related to the explosion of an offshore drilling rig in 2010 approaches, federal officials and those from the five affected Gulf Coast states are trying to pull together to strike an 11th-hour settlement in the case. Monday is the start of the trial, so this is going to be one enormous weekend of work for both sides.

Deepwater Horizon Cleanup

Deepwater Horizon Cleanup

A lawyer briefed on those talks said that the Justice Department and the five states — Alabama, Florida, Louisiana, Mississippi and Texas — had reportedly prepared an offer to resolve the two biggest issues central to a series of trials against BP.

One of those issues is the fines that the company would pay for violations of the Clean Water Act related to the four million gallons of oil spilled after the explosion of the Deepwater Horizon rig, which BP had leased from Transocean. The other point of dispute is how much the company will have to pay in penalties under a different environmental statute for damage caused by the oil to the area: beaches, marshes, wildlife and fisheries.

The Wall Street Journal reported late Friday that federal and state officials were preparing a $16 billion settlement offer that would cover both the Clean Water Act fines and environmental penalties related to the spill. “The ball is on BP’s side of the table,” said the lawyer, who spoke on the condition of anonymity because he was not authorized to speak publicly on the matter.

Oil Soaked Pelican Struggles in Gulf

Oil Soaked Pelican Struggles in Gulf

Only two of the states, Louisiana and Alabama, are participating in the trial starting on Monday, though Florida, Mississippi and Texas could be part of any settlement. Louisiana Officials believe their state deserves the bulk of any settlement since that state’s coastal waters, fisheries and businesses suffered the most. Florida and other states that escaped serious coastal damage instead want $ for economic losses that they sustained.

“There is no question that a settlement has been made more challenging because the states have competing interests,” said David M. Uhlmann, a law professor at the University of Michigan and former head of the Justice Department’s environmental crimes division.

To date, BP has agreed to pay an estimated $30 billion in fines, settlement payments and cleanup costs related to the Deepwater Horizon explosion, which killed 11 workers aboard the rig. And so far, company officials have said that they have no intention of acceding to demands from the states for huge economic damages.

Deepwater Horizon Blowing Up

Deepwater Horizon Blowing Up

Still, the stakes for BP in the trial are high. If the company is found in this first phase of the trial to have acted with gross negligence, it could face up to $17.5 billion in penalties, much of that in fines that would hit the bottom line hardest because they do not qualify as tax deductions.

The lack of a unified strategy to date among the states has also posed another problem for BP; companies are less likely to settle a major lawsuit if they know yet another one is waiting.

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~ by neworleansmusicman on February 23, 2013.

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