Tag Archives: BP and Department of Justice

Final Settlement: Gulf of Mexico Oil Spill

BP-logo-web

U.S. District Judge Carl Barbier in New Orleans gave his final approval April 4, 2016 to an estimated $20 billion settlement over BP’s massive 2010 oil spill. On July 2015, BP reached the $20 billion settlement with the federal government and five gulf states. The Justice Department has called it the largest environmental settlement in U.S. history as well as the largest-ever civil settlement with a single entity.  Barbier presided over a multiphase trial for the spill litigation before last summer’s settlement agreement resolved the bulk of the remaining civil claims against BP. The judge heard testimony from rig workers who survived the blast and from company executives who worked on the ill-fated drilling project off Louisiana’s coast. Barbier set the stage for the settlement when he ruled BP acted with “gross negligence” in the disaster….

In addition BP pleaded guilty in 2013 to manslaughter for the rig workers’ deaths and agreed to pay a record $4 billion in criminal fines and penalties.

In BP reached a multibillion-dollar settlement agreement with businesses and residents who claim the spill cost them money. That deal didn’t have a cap***, and a court-supervised claims administrator is still processing many of the claims.

***There is no limit on the total dollar amount of the Settlement, but BP will pay no more than $2.3 billion to compensate qualified claimants who are in the Seafood Compensation Program.

While BP has estimated that the total costs of the Settlement will be approximately $7.8 billion, there is no limit on the total amount of the Settlement (with the exception of the Seafood Compensation Program). The actual total amount paid out will depend on the number of qualified claims made, and could be higher or lower than BP’s estimate.***

Excerpts from Judge approves $20 billion settlement in gulf oil spill, Associated Press, April 4, 2016

Gross Negligence: the BP Approach to the Gulf Oil Spill

Gulf of Mexico disaster. image wikipedia

BP wants its money back — hundreds of millions of dollars of it — but a federal judge said Wednesday (Sept 24. 2014) that the oil giant must stand by the agreement it made with the companies it compensated for losses blamed on the 2010 Gulf oil spill.BP argued that a flawed funding formula enabled nearly 800 businesses to overestimate their spill-related claims.

One construction company hundreds of miles from the coast received $13.2 million, but deserved $4.8 million at most, BP said. Another company selling “animals and animal skins” was overpaid about $14 million, and about 50 others shouldn’t have been paid at all, the company said.  About 150 claimants should return a total of $185 million, and overpayments to the rest haven’t been calculated, attorney Kevin Downey argued.

U.S. District Judge Carl Barbier was not persuaded, thwarting BP’s latest attempt to control potential liabilities now approaching $50 billion.  The judge agreed weeks ago to change the compensation formula for any future payments, but ruled that a deal is a deal when it comes to the money BP has already paid out. Under that deal, claimants agreed not to sue, and BP agreed that no future court action could change their payments….

Barbier said he would rule later on the issue of compensation for cleanup workers whose chronic medical problems weren’t diagnosed until after the deal’s cutoff date of April 16, 2012. The settlement entitled cleanup workers with chronic conditions including rashes and breathing problems to receive up to $60,700 if the problems first surfaced within days of their cleanup work…

BP’s closing share price was $50.20 the day of the explosion, and fell to $22.80 in June 2010, before the well was capped. Shareholders returned after BP set aside $42 billion to cover its liabilities, reassured the financial damage was contained.  That’s no longer so clear: The judge’s ruling this month that BP showed gross negligence and willful misconduct added a new level of uncertainty around BP’s spill-related expenses, reducing its market value by $9 billion in a single day.,,BP’s total potential liabilities now include up to $18 billion in fines and penalties that could be imposed for violating federal pollution laws, and more than $27 billion BP says it has already paid to restore the coast and settle damage claims.

JANET MCCONNAUGHEY and JONATHAN FAHEY,Businesses Won’t Have to Return BP Spill, Associated Press, Sept. 24, 2014

See  also http://www.alphabetics.info/international/2012/09/12/bp-and-gross-negligence/

BP: a culture of corporate recklessness

The Obama administration has accused BP of gross negligence and willful misconduct in causing the Deepwater Horizon oil spill of 2010. In a new court filing, the Department of Justice appears bent on blaming BP for the worst oil disaster in U.S. history.  The court document blasts BP’s leadership in no uncertain terms. Referring to “A Culture of Corporate Recklessness,” it states that “The behaviour, words and actions of these BP executives would not have been tolerated in a middling size company manufacturing dry goods for sale in a suburban mall.” It criticizes “the utter lack of any semblance of investigation of the systemic management causes deeply implicating the corporate managers and leadership who caused and allowed the rig-based mechanical causes to fester and ultimately explode in a fireball of death, personal injury, economic catastrophe, and environmental devastation.”

Referring to a “negative pressure test” performed by BP and Transocean hours before the blowout, the report states, “That such a simple, yet fundamental safety-critical test could have been so stunningly, blindingly botched in so many ways, by so many people, demonstrates gross negligence.”  The designation of “gross negligence” under the Clean Water Act, is an important distinction because it would mean the company could face $21 billion in civil damages alone—almost quadruple the penalty if “gross negligence” is not confirmed. BP also faces criminal charges.

The case may not go to trial, which is scheduled to begin January 14. Both sides are negotiating to reach a settlement to resolve both civil and criminal violations.  The Justice Department reportedly sought a $25 billion agreement from BP, but now may be willing to settle for $15 billion.

Justice Dept. Accuses BP of “Gross Negligence” over Gulf Oil Spill, AllGov.com, Sept. 7, 2012