BP begs for settlement as sharpened sword of justice looms


In a few hours, the government’s massive civil case against BP in the Deepwater Horizon spill is finally slated to come to trial. As we noted on the blog last week, it’s unusual for a case this large — with so much to lose for both sides — to come before a judge. The fact that the U.S. Justice Department has been pressing forward is a powerful signal of confidence by the government’s lawyers, that they feel they can indeed prove that BP was guilty of gross negligence in ignoring the flaws in the offshore rig that led to the disaster. So it shouldn’t be surprising that BP — at the last minute — has made what seems like quite a generous settlement offer to the feds and the Gulf Coast states:

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, the first of which starts Monday.

One of those issues is the fines that the company would pay for violations of the Clean Water Act related to the 4 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 condition of anonymity because he was not authorized to do so.

So what’s going on here? The wild cards in the case are the two other defendants — Transocean, the company that owned the Deepwater Horizon rig and leased it to BP, and Halliburton, the notorious oil-field contractor that manufactured the critical drilling equipment. Unlike BP, neither firm has as deep pockets. Transocean agreed in January to pay the government a $1.4 billion fine for violating the Clean Water Act, a significant amount but one that would help the firm avoid bankruptcy — for now. Like Transocean, Halliburton and its high-priced legal team are eager to prove that the April 2010 rig explosion was almost solely BP’s fault. So the British oil giant is playing defense from all sides.

No wonder BP would pay such a large penalty to keep this case from going to trial. The government’s lawyers have sharpened the sword of justice and are holding it over the energy company’s head. That said. I’m still very hopeful that the feds and the interested states will not settle, but bring this case to trial. The case for gross negligence — that BP knew there were serious design and safety flaws with the rig yet failed to act — is a powerful one. The U.S. government would be doing the public — including thousands of business owners and Gulf residents with unresolved claims — a huge favor by proving its case in the courtroom.

For a report on BP’s proposed settlement offer, check out: http://www.timesunion.com/news/article/16B-deal-in-BP-case-4303295.php

Find out more about Transocean’s January settlement with the feds at:  http://www.usatoday.com/story/money/business/2013/01/03/transocean-settlement-gulf-spill/1806935/

Read my Feb. 20 post on the pending BP case: https://www.stuarthsmith.com/public-will-finally-get-its-day-in-court-against-bp/

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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