BP’s $8.7 billion attempt to put the 2010 Deepwater Horizon spill behind it continues to come undone.
In the latest unraveling of the oil giant’s proposed settlement with thousands of Gulf residents and businesses harmed by the offshore disaster, key rig contractor Halliburton has filed court papers (here and here) slamming the deal as unfair and lacking transparency, and urging a judge to reject it.
Halliburton’s plea to U.S. District Court Judge Carl Barbier to ditch the settlement is largely based on its findings from an expert in damages — Marc Vellrath, the CEO of the Finance Scholars Group — who attacked the sprawling settlement as failing to distinguish from the wide variety of the claims against BP.
“An upscale seafood restaurant in New Orleans, Louisiana, does not suffer the effects of an oil spill in the same way as a golf course in Mobile, Alabama,” according to the legal brief filed this week by Halliburton. “Likewise, an oyster fisherman operating off the coast of Louisiana has a claim that is very different from a hotel on the coast of Florida.”
Halliburton’s objections come just days after stinging briefs in the case by the U.S. Justice Department and the state of Alabama tore into BP for misrepresentations in its defense of the settlement. The federal lawyers — who are pursuing its claims against the oil giant in a separate case — said that BP is trying to ignore its “gross negligence” that caused the April 2010 Deepwater Horizon explosion as well as the deep and lingering environmental devastation in the Gulf.
News of the U.S. government’s legal assault on BP — a story that was broken on this blog Tuesday — has caused a sharp decline in the company’s stock price, which was off 4 percent in early trading Wednesday. That’s because the government’s pursuit of gross negligence by BP could quadruple punitive damages against the firm, raising its potential loss in the federal case to $21 billion.
The case of Halliburton is a complicated one. The massive oil-patch contractor once captained by Dick Cheney is worried about its own future liability in the explosion that killed 11 workers and ultimately spewed 5 million barrels of crude oil in the Gulf of Mexico. As a result, Halliburton’s lawyers and their expert Vellrath put out the argument that the $8.7 billion deal is too hasty and too generous. That argument is at odds with the facts laid out by the U.S. government — that pollution from the 2010 spill is far from over — and by this week’s news that BP’s oil is again fouling beaches across four states with oil churned up by Hurricane Isaac.
However, Halliburton’s brief also makes a compelling argument that the $8.7 billion falls short in a number of critical and important areas. For example:
— A rush to settle: The contractor’s lawyers argue that BP’s expert defense of the settlement “offers nothing more than an oversimplified and conclusory analysis to substantiate his claims.” They state that flaw is keeping with the approach by BP, as well as some eager plaintiff attorneys, “to submit only conclusions without facts and without showing their work in reaching those conclusions.”
— Unfairness: Consultant Vellrath finds that, in lumping together so many spill victims with such differing claims, the settlement class is “arbitrary and does not delineate a cohesive and coherent collection of similar situated persons or entities.”
The deadline for filing objections or other briefs is Friday. Judge Barbier will hold a hearing in early November on the fairness of the settlement. One thing is already clear: Parties to this case with very divergent interests agree that BP has rushed the process, failed to offer transparency and glossed over the shocking extent of its own negligence in the Deepwater Horizon case.
Don’t be surprised to see more bombshells between now and Friday’s deadline.
You can read the first half of Halliburton’s legal objections here: http://www.stuarthsmith.com/wp-content/uploads/2012/09/Halliburtons_Economic_Objections.pdf
You can read the second half of Halliburton’s legal objections here: http://www.stuarthsmith.com/wp-content/uploads/2012/09/Halliburtons_Medical_Objections.pdf
Here is Tuesday’s blog post that first revealed the objections by the U.S. government and the state of Alabama: http://www.stuarthsmith.com/bombshell-feds-slam-bp-in-key-court-filing-admit-pollution-from-2010-spill-continues-to-ravage-gulf
To read a report on BP’s stock price declining sharply in the wake of the reports: http://www.chicagotribune.com/business/breaking/chi-bp-shares-sink-as-doj-crushes-bp-oil-spill-settlement-hopes-20120905,0,378026.story?track=rss
© Smith Stag, LLC 2012 – All Rights Reserved