$4B BP Criminal Settlement for Gulf Oil Spill

Story first appeared on USA Today -

The settlement includes payments of nearly $2.4 billion to the National Fish and Wildlife Foundation and $350 million to the National Academy of Sciences.

A federal judge on Tuesday approved a plea deal between energy giant BP and the U.S. Justice Department for the company's role in the 2010 Gulf of Mexico oil spill, finalizing BP's criminal liability for the spill's aftermath.

As part of the agreement, BP agreed to pay $4 billion in fines — the largest criminal resolution in U.S. history — and pleaded guilty to 14 counts of criminal acts ranging from obstruction of Congress to felony manslaughter.

BP agreed to the deal in November, and it was finalized Tuesday by U.S. District Judge Sarah Vance. BP was leasing the Deepwater Horizon rig in April 2010 when it exploded and sank off the coast of Louisiana, killing 11 crewmen and releasing about 200 million gallons of crude into the Gulf.

Before ruling, Vance heard testimony from relatives of the workers who died in the incident. She told the relatives who were in court that she read their "truly gut-wrenching" written statements and factored their words into her decision, adding that BP executives should have personally apologized to family members.

"I think BP should have done that out of basic humanity," Vance said.

According to a BP statement, Luke Keller, a vice president of BP America, addressed the victims' families during the hearing and reiterated the company's regret for its involvement in the incident.

"Our guilty plea makes clear, BP understands and acknowledges its role in that tragedy, and we apologize — BP apologizes — to all those injured and especially to the families of the lost loved ones," he said.

Under the criminal settlement, BP agreed to pay nearly $1.3 billion in fines. The largest previous corporate criminal penalty assessed by the Justice Department was a $1.2 billion fine against drug maker Pfizer in 2009.

The settlement also includes payments of nearly $2.4 billion to the National Fish and Wildlife Foundation and $350 million to the National Academy of Sciences.

The deal brings BP's criminal liability for the spill to a close. But the company still faces the federal government's civil claims, claims by Gulf Coast residents and businesses and federal environmental penalties that could total into the tens of billions of dollars, said Blaine LeCesne, an associate professor at Loyola University New Orleans' College of Law, who has been following the proceedings.

BP separately agreed to a settlement with lawyers for residents and businesses who claim the spill cost them money. BP estimates the deal with private attorneys will cost the company roughly $7.8 billion but that figure could climb significantly as more plaintiffs sign on, LeCesne said.

The big-money penalties could come under the Clean Water Act and the Natural Resource Damage Assessment process, which could skyrocket BP's fines, especially if the company is found to be "grossly negligent," LeCesne said. Company attorneys and government officials are currently negotiating what those fines could be, he said.

"There's a significant amount of legal liability left," he said. "They have potentially another $30 billion to $40 billion to go before they're out of the woods."

Guilty! BP pleas to manslaughter in 2010 Gulf Oil Tragedy

Story first appeared on Los Angeles Times -

A federal judge in New Orleans accepted an agreement for BP to plead guilty to manslaughter and other charges and pay a record fine in connection with the 2010 oil spill in the Gulf of Mexico, which ranks as one of the nation’s worst environmental disasters.

The agreement, announced in November, allowed a unit of the London-based oil giant to plead guilty Tuesday to 11 counts of seaman’s manslaughter in connection with the explosion and fire on the Deepwater Horizon oil rig in the gulf. The company also entered a guilty plea to one felony count of obstruction of Congress and two environmental misdemeanors.

The company was fined $4 billion in connection with the spill and was given five years’ probation.

Tuesday’s court action ends the company’s current criminal issues, but is just one step in the ongoing proceedings related to the disaster. Four current or former BP employees have been indicted on criminal charges. BP has separately agreed to a $7.8-billion settlement with lawyers representing Gulf Coast residents and businesses and could be assessed more than $17 billion under the Clean Water Act.

“Today’s guilty plea and sentencing represent a significant step forward in the Justice Department’s ongoing efforts to seek justice on behalf of those affected by one of the worst environmental disasters in American history,” Atty. Gen. Eric H. Holder Jr. said in a statement. “I’m pleased to note that more than half of this landmark resolution -- which totals $4 billion in penalties and fines and represents the single largest criminal resolution ever -- will help to provide direct support to Gulf Coast residents as communities throughout the region continue to recover and rebuild.”

At the hearing, BP again apologized for the deaths and for the spill.

“We -- and by that I mean the men and the women of the management of BP, its board of directors and its many employees -- are deeply sorry for the tragic loss of the 11 men who died and the others who were injured that day,” Luke Keller, a vice president of BP America Inc., said in a statement. “Our guilty plea makes clear BP understands and acknowledges its role in that tragedy, and we apologize -- BP apologizes -- to all those injured and especially to the families of the lost loved ones. BP is also sorry for the harm to the environment that resulted from the spill, and we apologize to the individuals and communities who were injured.”

U.S. District Judge Sarah S. Vance in New Orleans called the agreement a reasonable disposition of the case. Before she ruled, she heard from relatives of some of the 11 workers who died on the Deepwater Horizon when the Macondo oil well blew out on April 20, 2010.

“I've heard and I truly understand your feelings and the losses you suffered,” she said.

Billy Anderson, whose 35-year-old son, Jason, of Midfield, Texas, died in the blast, recalled the trauma of watching the disaster play out on television.

“These men suffered a horrendous death,” he said, according to the Associated Press. “They were basically cremated alive and not at their choice.”

According to the Justice Department, Vance found, “among other things, that the consequential fines imposed under the plea agreement far exceed any imposed in U.S. history, and are structured so that BP will feel the full brunt of the penalties. She also noted that the agreement provides just punishment and significant deterrence, requiring detailed drilling safeguards, monitors and other stringent, special conditions of probation so that BP’s future conduct will be closely watched.”

About $2.4 billion is earmarked for the National Fish and Wildlife Foundation and will go for restoration and preservation of systems damaged by the spill. An additional $350 million will go to the National Academy of Sciences for research, the Justice Department said.

BP agreed to pay nearly $1.3 billion in fines, the largest such penalty in U.S. history, surpassing a $1.2-billion fine against drug maker Pfizer in 2009. It also received five years' probation, the maximum term. The company is also required to have a safety and risk management monitor and an independent auditor. It will also have to have an ethics monitor to ensure full candor with the government.

Those still awaiting trial include BP rig supervisors Robert Kaluza and Donald Vidrine, who are charged with manslaughter and are accused of disregarding abnormal high-pressure readings. David Rainey, BP's former vice president of exploration for the Gulf of Mexico, was charged with withholding information from Congress about the amount of oil that was pouring out of the well into the gulf. Former BP engineer Kurt Mix was charged with deleting text messages about the company's spill response.

BP Trial on Hold for Settlement Talks

First appeared in Yahoo! News

BP Plc has delayed by one week the start of a massive trial to decide who should pay for the 2010 Gulf of Mexico oil spill, to allow more time to cut a deal with tens of thousands of businesses and individuals affected by the disaster.

In a statement on Sunday, BP said the start date for the trial in New Orleans federal court has been pushed back to March 5 from February 27.

The Plaintiffs' Steering Committee (PSC) represents fishermen, hoteliers, condominium owners and other local businesses and individuals who say their livelihoods were damaged by the April 20, 2010 explosion of the Deepwater Horizon drilling rig and subsequent oil spill.

Eleven people died, and 4.9 million barrels of oil spewed from the mile-deep Macondo oil well, in by far the worst offshore U.S. oil spill.

"BP and the PSC are working to reach agreement to fairly compensate people and businesses affected by the Deepwater Horizon accident and oil spill," BP said in a statement.

A BP spokeswoman declined to comment further on the talks. Lawyers for BP and the steering committee did not immediately respond to requests for comment. A spokeswoman for the U.S. Department of Justice, which is also suing BP, declined to comment.

In an order dated Sunday, Barbier said the adjournment was appropriate "for reasons of judicial efficiency and to allow the parties to make further progress in their settlement discussions."

A BP settlement with the businesses would remove a significant portion of the complex litigation, the trial of which was expected to take nearly a year.

But the U.S. government has sued BP and others for Clean Water Act and other federal violations, which could result in fines totaling tens of billions of dollars. Gulf states are also seeking compensation for their losses.

Apart from BP, which owned 65 percent of the Macondo well, the main defendants are Vernier, Switzerland-based Transocean Ltd, which owned the Deepwater Horizon rig, and Houston-based Halliburton Co, which provided cementing services for the well. They are also suing each other. Several other companies are also involved in the trial.

BP said earlier this month it had set aside $6.1 billion to cover claims by businesses. Lawyers for those plaintiffs said the amount was too low to cover their clients' actual losses, and that BP should also award punitive damages, which the oil company believes are not warranted.

BP has accepted responsibility for the disaster. It has projected its total legal and cleanup costs at roughly $43 billion.

Chief Executive Robert Dudley has said BP is willing to settle for reasonable terms, and many industry analysts and experts say a quick settlement is in the London-based oil company's interest.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

Transocean Saved by BP Contract

First appeared in USA Today

The rig owner involved in drilling the ill-fated well that blew out in the Gulf of Mexico and spewed more than 200 million gallons of oil will not have to pay many pollution claims because it was shielded in a contract with well-owner BP, a federal judge ruled Thursday. A Wash DC Environmental Lawyer watches.

The ruling comes as BP, the U.S. southern states affected by the disaster and the federal government are discussing a settlement over America's largest offshore oil spill.

BP PLC, Transocean Ltd. and Halliburton Co. have been sparring over who was at fault for causing the blowout. The out-of-control well was capped in July 2010. Federal investigators have said that BP bears ultimate responsibility for the spill, but has faulted all three companies to some degree. An Amsterdam Environmental Lawyer watches the case closely.

Thursday's decision may have spared Transocean from having to pay potentially billions of dollars in damage claims. However, U.S. District Judge Carl Barbier said the driller still is not exempt from paying punitive damages and civil penalties that arise from the April 20, 2010, blowout 100 miles off the Louisiana coast. Those penalties could amount to billions of dollars.

Law experts were split over who is a clear-cut winner. A New Orleans Environmental Lawyer is pretty decided.

BP has been pursuing agreements with multiple parties to reach settlements that would make an upcoming trial involving hundreds of spill lawsuits in New Orleans unnecessary, or at least resolve as many of the issues as possible.

The Justice Department also is involved, working with the states to create an outline for a settlement that would resolve their potentially multibillion dollar claims against BP and the other companies involved in the disaster, Alabama Attorney General Luther Strange told The Associated Press.

Justice led a meeting last week in Washington among the U.S. states in an effort to formulate an agreement that would satisfy government and state claims, including penalties and fines, Strange said. He also indicated if there is a settlement that officials are discussing what to do with the $20 billion fund set up by BP to pay victims. A Chicago Environmental Lawyer hopes there’s more to come.

The lead attorneys for individuals and businesses suing BP were not at the meeting.

According to Strange, a federal magistrate judge has been asked to expedite settlement discussions. The Louisiana attorney general's office said in a statement to the AP that it is in settlement discussions with BP, which would not comment on any deals in the works. A first phase of the trial is set for Feb. 27 to determine liability for the spill.

"The closer you get to a trial date, the more pressure builds to reach a settlement," Strange said.

Despite the decision, BP claimed victory and said Barbier's ruling "at a minimum" left Transocean facing "punitive damages, fines and penalties flowing from its own conduct." A St. Louis Environmental Lawyer is wondering what’s next.

Transocean spokesman Lou Colasuonno said in an emailed statement that the company was pleased to see its position affirmed.

"This confirms that BP is responsible for all economic damages caused by the oil that leaked from its Macondo well, and discredits BP's ongoing attempts to evade both its contractual and financial obligations," he said.

Blaine LeCesne, an associate professor at Loyola University law school, however, said Barbier's ruling was a "major victory" for Transocean.

"If anything is going to compel the parties toward settlement, it's going to be this," he said. "I think BP is in a very bad position now, and they don't have a lot of leverage."

A University of Michigan Law School professor who served as chief of the Justice Department's environmental crimes section said the ruling had no clear-cut winner. David Uhlmann said it prevents BP from collecting billions of dollars from Transocean to help cover cleanup costs and pay for claims over economic losses and environmental damage from the spill. But the decision leaves Transocean facing potentially billions of dollars in civil and criminal penalties under the Clean Water Act, he added. A Fresno Environmental Lawyer may agree.

"It's a partial win for each side and a partial loss for each side," Uhlmann said.

Under a drilling contract, BP and Transocean agreed to indemnify each other in the case of an accident, with BP taking responsibility for pollution originating from the well and Transocean for any pollution or accidents aboard the rig.

However, in court BP argued that the contract did not shield Transocean if the drilling company acted in manner that was grossly negligent.

Barbier said the contract was a "clear and unequivocal agreement" to provide "broad indemnity."

"As we have said from the beginning, Transocean cannot avoid its responsibility for this accident," BP said.

The British oil giant said it had "stepped up" and admitted its role in the spill and paid billions of dollars in claims.

BP also is eager to resolve its disputes with its partners on the doomed rig. The companies have sued and countersued each other for billions of dollars to protect themselves when it comes to paying damages to victims and penalties to the government.

Months ago, BP offered to resolve its dispute with Transocean if Transocean paid BP roughly $4.5 billion, according to a person briefed on the discussions who spoke to the AP on condition of anonymity because the talks are confidential. Transocean rejected the offer, and there have been no substantive discussions between the companies about figures since then, the person said, adding that Thursday's ruling could spur further talks. A Pittsburgh Environmental Lawyer is curious.

Eric Schaeffer, who led the Environmental Protection Agency's civil enforcement office from 1997 to 2002, said Thursday's ruling will put even more pressure on BP.

"If BP is less able to shift some of those costs to Transocean, if they understand they are going to bear Transocean's share of compensatory damages, I'd want to get it settled," Schaeffer said. "That's no longer a wild card."

BP Lawyers Reviewed Report on Accident

The Wall Street Journal

 

LONDON—BP PLC, which billed its Deepwater Horizon inquiry as an independent look at the disaster, said its lawyers were allowed to "review" the long-awaited report before it was published.

A BP spokesman said its lawyers provided "legal advice and counsel to the [investigative] team," but wouldn't elaborate on what exactly that entailed. He also declined to characterize the nature of the review, and what changes, if any, the lawyers made to BP's 193-page report on the April accident that triggered the worst U.S. offshore oil spill. But he said the BP lawyers "were walled off from the rest of the company."

The spokesman also said some "internal and external" lawyers for BP worked with investigators "in order to interact with lawyers for other companies to obtain evidence for the investigation," and to "assist in the preservation of evidence for litigation and ongoing investigations."

The disclosure raises questions about the extent of the independence of BP's report, which was released Wednesday and assigned much of the blame for the accident to BP's contractors, Transocean Ltd. and Halliburton Co. The U.K. oil giant has said its four-month investigation on the causes of the accident, which killed 11 workers, was carried out without interference from senior management.

Transocean, Halliburton and others quickly blasted the report for not being tough enough on BP itself, with some legal analysts suggesting the report served as a preview of BP's future legal strategy. As operator of the Deepwater Horizon rig, BP faces many lawsuits over the accident.

For BP, the stakes are high as it tries to dodge accusations of gross negligence stemming from the disaster. Under the Clean Water Act, BP might have to pay fines of at least $1,100 a barrel of oil spilled. But if the government finds the spill resulted from gross negligence, the fine could be $4,300, potentially boosting the total to more than $20 billion.

Houston-based Anadarko Petroleum Corp., which owns a 25% stake in the well, has said its contract with BP stipulates that BP is responsible for all damages caused by "its gross negligence or willful misconduct."

In the executive summary of the report, BP said its investigators worked "independently from other BP oil spill response activities and organizations." BP's head of safety, Mark Bly, who spearheaded the investigation, reiterated the independence of the report on Wednesday.

BP said its investigation team involved 50 specialists both from BP and outside the company, and from a variety of fields, such as safety and drilling, though legal affairs was not included in that list.

"It certainly raises a question of whether [the lawyers] considered the legal implications of the report," Mark Brown, a partner at Bristows, a U.K. law firm, said. "But we just don't know. What is important is that if there is relevant information not included in the report available to BP which surfaces later, that could hurt the company," Mr. Brown added.

Bristows has business with one of the three main companies involved in the Deepwater Horizon accident—BP, Transocean and Halliburton—but Mr. Brown wouldn't disclose which one for confidentiality reasons.

BP Says Limits on Drilling Imperil Spill Payouts

NY Times

 

BP is warning Congress that if lawmakers pass legislation that bars the company from getting new offshore drilling permits, it may not have the money to pay for all the damages caused by its oil spill in the Gulf of Mexico.

The company says a ban would also imperil the ambitious Gulf Coast restoration efforts that officials want the company to voluntarily support.

BP executives insist that they have not backed away from their commitment to the White House to set aside $20 billion in an escrow fund over the next four years to pay damage claims and government penalties stemming from the April 20 explosion of the Deepwater Horizon drilling rig. The explosion killed 11 workers and spewed millions of barrels of oil into the gulf.

The company has also agreed to contribute $100 million to a foundation to support rig workers who have lost their jobs because of the administration’s deepwater drilling moratorium. And it pledged $500 million for a 10-year research program to study the impact of the spill.

But as state and federal officials, individuals and businesses continue to seek additional funds beyond the minimum fines and compensation that BP must pay under the law, the company has signaled its reluctance to cooperate unless it can continue to operate in the Gulf of Mexico. The gulf accounts for 11 percent of its global production.

“If we are unable to keep those fields going, that is going to have a substantial impact on our cash flow,” said David Nagel, BP’s executive vice president for BP America, in an interview. That, he added, “makes it harder for us to fund things, fund these programs.”

The requests keep coming for BP to provide additional money to the Gulf Coast to help mitigate the effects of the spill. This week, Bobby Jindal, the governor of Louisiana, reiterated his request that BP finance a five-year, $173 million program to test, certify and promote gulf seafood.

BP has already agreed to pay for some measures that exceed its legal obligations. For instance, to help promote tourism in affected regions, it donated $32 million to Florida’s marketing efforts and $15 million each to Louisiana, Mississippi and Alabama.

But the company, which is based in London, now appears to be using such voluntary payments as a bargaining chip with American lawmakers.

BP is particularly concerned about a drilling overhaul bill passed by the House on July 30. The bill includes an amendment that would bar any company from receiving permits to drill on the Outer Continental Shelf if more than 10 fatalities had occurred at its offshore or onshore facilities. It would also bar permits if the company had been penalized with fines of $10 million or more under the Clean Air or Clean Water Acts within a seven-year period.

While BP is not mentioned by name in the legislation, it is the only company that currently meets that description.

The provision was written by Representative George Miller, Democrat of California, who is a strong environmental advocate and a close ally of Nancy Pelosi, the House speaker.

It was specifically designed to punish BP for its past transgressions, including the Deepwater Horizon explosion, and deny the company access to American offshore oil and natural gas.

“The risk of having a dangerous company like BP develop new resources in the gulf is too great,” said Daniel Weiss, Mr. Miller’s chief of staff. “Year after year after year, no matter how many incidents they’re involved in, no matter how many fines they’ve had to pay, they never changed their behavior. BP has no one to blame but themselves.”

BP’s concerns are becoming public as the company begins final preparations for permanently sealing its stricken well. On Thursday, it removed the temporary cap on top of the well, which had earlier been blocked with cement, so that it could replace the blowout preventer. The blowout preventer, a massive piece of equipment whose valves failed to shut down the oil flow after the explosion, is a crucial piece of evidence in the investigation.

Andrew Gowers, a BP spokesman, said that BP had shown good will by going beyond its legal obligations to clean up the spill and compensate those affected.

“We have committed to do a number of things that are not part of the formal agreement with the White House,” he said. “We are not making a direct statement about anything we are committed to do. We are just expressing frustration that our commitments of good will have at least in some quarters been met with this kind of response.”

Mr. Gowers suggested that the proposed legislation contradicted President Obama’s stated desire to keep BP a strong and viable company after the agreement to set up the escrow fund. He added, “I am not going to make a direct linkage to the $20 billion, but our ability to fund these assets and the cash coming from these assets that are securing these funds would be lost” if the House bill were enacted by Congress.

BP executives have said that regulators in other countries have not circumscribed their deepwater operations since the gulf accident. The only exception came in Greenland, where officials quietly told BP that it was not welcome to join in an auction for offshore leases in a new Arctic drilling zone.

BP is the largest producer of oil and gas in the gulf, pumping 400,000 barrels a day and accounting for about 20 percent of total production from deepwater reservoirs in the region. The company operates 89 production wells and shares a stake in 60 other wells operated by partner companies.

As BP has tried to raise cash to pay for damages caused by the spill, it has suspended its dividend and intends to sell off as much as $30 billion of assets around the world.

But the Gulf of Mexico remains crucial to the company’s finances.

“The gulf is the most profitable barrel in BP’s portfolio,” said Fadel Gheit, a managing director at Oppenheimer & Company. He estimated that the gulf generated $5 billion to $7 billion in profits annually for BP, or about a quarter of the company’s total.

Mr. Weiss dismissed BP’s warning that it might not be able to meet its financial obligations. “BP has substantial assets, whether they develop them or sell them,” he said. “If BP needs to sell assets to meet its financial obligations, that’s a decision they have to make.”

BP said that the House bill would stymie new drilling and cripple the company’s existing gulf operations.

Mr. Nagel said BP had discussed the matter with House leaders, and that company executives intended to discuss the matter with Senate leaders after the summer recess. The Senate version of the drilling reform bill does not specifically ban BP from future leases, but it grants regulators explicit authority to deny leases to companies with safety or environmental problems.

The Obama administration endorsed the overall House bill, but has been silent on the Miller amendment. An Interior Department official said that the agency already had the authority to deny a company guilty of safety or environmental regulations the right to bid on offshore leases.

Legal Strategies Unveiled at Oil Spill Hearings

The Wall Street Journal

 

For five days last week, federal investigators grilled witnesses to answer key questions about the disastrous explosion of the Deepwater Horizon drilling rig: Why did it happen? How can we make sure it never happens again?

But in their questions to witnesses, lawyers for the companies under scrutiny—BP PLC, Transocean Ltd. and Halliburton Co.—focused on testimony that might answer another question: Who will pay?

The April 20 blast, which killed 11 workers and set off the worst offshore oil spill in U.S. history, has prompted hundreds of lawsuits against more than a dozen companies and individuals.

The hearings, which began last spring outside New Orleans and continued last week in a nondescript hotel conference room here, have previewed the years of legal drama to come. Nominally a fact-finding investigation led by the Coast Guard and Interior Department, the process has allowed lawyers from all parties to dig for evidence, test out theories and read into the record snippets of information carefully chosen for their headline-grabbing potential.

"The facts are out now," said David Pursell, managing director at Tudor Pickering Holt & Co., an energy-focused investment bank in Houston. "People are positioning for the pending deluge of lawsuits."

The investigative board will produce a report—expected next year—and could recommend that charges be filed by the Justice Department. Its hearings are to resume in October.

The board's earlier hearings were relatively staid and filled with technical discussions. But the hearing last week prompted company lawyers to make speeches (to make a broader point) and to loudly object whenever their opponents did the same. Many witnesses have remained on the stand for hours, and the board recently recruited a retired federal judge to help maintain order.

That judge, Wayne Andersen, pleaded with lawyers on Friday morning to stay focused on the government board's fact-finding mission following a day of especially sharp exchanges. The hearing, Mr. Andersen said, had come to resemble a "trial hearing, as if this were an adversarial proceeding."

BP in particular has seized on the hearings to deflect attention back onto its contractors, especially Transocean, which owned the rig, and Halliburton, which performed cement jobs on the well.

BP lawyers have focused on the rig's blowout preventer, the towering stack of valves on the sea floor designed to shut down a well in an emergency. What caused the failure of the device, which is owned and maintained by Transocean, remains a central mystery in the Gulf disaster.

Transocean witnesses have testified to some problems with the blowout preventer, including hydraulic leaks, though they consistently have said the device had been tested repeatedly and was in good working order.

Still, BP scored points on Wednesday when it got Transocean officials to say that the blowout preventer had not gone through an extensive certification process as required by federal regulations. BP representatives quickly distributed copies of those regulations to members of the press covering the hearing. And, under questioning from BP lawyers, Transocean also testified they had the responsibility for keeping the well under control.

Transocean lawyers, for their part, tried to show that BP made most of the decisions on the well, either on the rig or from the company's Houston offices.

In hearings last month, Transocean attorney Miles Clements repeatedly pushed one of BP's mangers on the rig, Ronald Sepulvado, as to who was in charge.

"You were the top, top ranking man on the rig in the hierarchy, were you not, sir?" Mr. Clements asked.

"Well, you know, everybody's on the same level," Mr. Sepulvado replied.

Mr. Clements tried again: "Would you say the buck stopped with you on the rig?"

"Well, sometimes it did and sometimes it didn't," said Mr. Sepulvado, who added that workers talked through any disagreements.

"Sure. And at the end of those discussions, would you be the one to decide what to do?" Mr. Clements finally asked.

"Yes," came the answer.

The battle between BP and Halliburton has also been intense. Halliburton designed and pumped a cement seal that experts believe may have failed and allowed explosive natural gas to enter the well, then reach the rig.

On Tuesday, BP cited emails by Halliburton workers saying that the cement operation had been successful. Jesse Gagliano, a Halliburton engineer, testified that the emails referred to the process of pumping the cement and did not predict whether it would form an effective seal.

By Thursday, the tenor of the hearings deteriorated when Halliburton lawyer Donald Godwin accused BP deepwater operation manager David Sims of "lying" during questioning. The charge prompted raised voices and arguments among the two-dozen lawyers participating in the hearing.

Mr. Andersen later admonished all parties to behave.

"A certain amount of theatrics makes the day more interesting," he said, "but it inhibits the witness and prevents us from getting good information. If we can restrain ourselves from arguing with the witnesses and any theatrical behavior, that would be helpful."

Asked for response to the legal strategy evidenced in the hearings, a BP spokeswoman said the company "will continue to cooperate with this and other government sponsored investigations into this tragedy." A Halliburton spokeswoman said the company is confident it completed its work in accordance with BP's specifications and that Halliburton continues to cooperate with all investigations. Transocean declined to comment.

Hinting at Strategy the key firms involved in the Gulf oil spill have dueled at the government's fact-finding hearings:

BP PLC

London

Oil & Gas producer

Market cap: $113.4 billion

Role in incident: Owner of the well, called Macondo, being drilled by the Deepwater Horizon.

Key testimony: A BP engineer testified that he never opened a report from Halliburton explaining that the cement job could allow gas to enter the well.

Transocean Ltd.

Zug, Switzerland

Oil & gas drilling

Market cap: $16.6 billion

Role in incident: Owner of the Deepwater Horizon drilling rig, including its equipment such as the blowout preventer; contracted to drill the well for BP Plc

Key testimony: A Transocean manager acknowledged that the company is responsible for "well control."

Halliburton Co.

Houston

Oil & gas equipment and services

Market cap: $26.6 billion

Role on Deepwater Horizon: Designed and poured the cement seal that was supposed to keep gas out of the well.

Key testimony: Halliburton officials acknowledged emails from their engineers saying that the cement operation had been successful, though evidence increasingly indicates that there was a problem with the cement.

BP Not Denying, Just Not Paying Nearly 40,000 Oil Spill Claims

Huffington

 

Sheryl Lindsay's wedding planner business is on the brink, crumbling with each cancellation over concerns about oil. Brides-to-be are walking away from plans for beachside vows, leaving Lindsay waiting to see whether she'll be part of BP's promise to make whole everyone who's suffered from its spill.

BP said Monday it had received 145,000 claims from residents and business owners like Lindsay citing lost income because of the massive spill in the Gulf of Mexico, and had paid out $324 million without denying a single claim.

That sounds pretty good, until frustrated residents and officials point out that 39,000 claims are in limbo – some of them, including Lindsay's, have been there for months. Some that have been paid are only partial payments, and many of those people are still fighting for more money.

"Therein lies the problem," Mississippi Attorney General Jim Hood said recently. "They don't deny them. They just hold them open forever."

Hood speculated that BP PLC would rather wait for Kenneth Feinberg, the federally appointed administrator of the $20 billion compensation fund BP established at the behest of the White House, to take over the claims process this month. That way, if a claim is denied, "he's the bad guy" instead of BP, Hood said.

BP claims director Darryl Willis said the company isn't deliberately delaying. Rather, 26,000 pending claims are still being evaluated and thousands of others need more documentation, the company said.

"Our intent is to continue paying claims until this process is handed over to Ken Feinberg," Willis said. "There's no intent to slow this thing down."

However, BP does defer "questionable" claims to Feinberg, including "restaurants and tourist claims from areas that haven't been impacted by an oiled beach," company spokeswoman Pat Wright said.

"We believe there are some tough decisions out there that need to be made on a variety of these claims because many of these are claims are not squarely within the guidelines of the Oil Pollution Act," she added.

BP to Pay $50.6 Million for Texas Safety Lapses

The Wall Street Journal

 

 

British oil giant BP PLC will pay a $50.6 million fine for failing to fix safety hazards at its Texas City, Texas, oil refinery after an explosion in 2005, and will pour $500 million into the facility for safety improvements.

Labor Secretary Hilda Solis said Thursday that BP also agreed to establish a liaison between its directors and the Occupational Safety and Health Administration, which enforces U.S. workplace-safety laws. OSHA said the arrangement was a first for the agency.

BP agreed to hold regular meetings with OSHA officials, allow frequent site inspections and submit quarterly reports for OSHA's review, Ms. Solis said, in an agreement that represented an "unprecedented level of oversight of BP's safety program."

BP and the Labor Department are still discussing how to resolve about $31 million of remaining fines proposed for subsequent violations found at the refinery, where 15 workers were killed in the explosion.

BP said the settlement resolves 270 of the 709 citations OSHA issued in October 2009. BP said "the refinery has undertaken extensive actions to enhance worker safety since 2005."

The company said it hopes the settlement pact will provide a platform to resolve the remaining citations.

The $500 million BP will invest from 2010 to 2016 is in addition to more than $1 billion the company has spent on safety and infrastructure improvements from 2005 through last year, BP said.

The deal is the latest concession BP has made to the Obama administration in recent months, a period during which it has faced intense political pressure over the oil spill that erupted in April when a rig it was leasing exploded in the Gulf of Mexico. BP earlier agreed to set up an independently administered $20 billion escrow account to compensate victims of that disaster.

BP and the White House have agreed that revenue from the company's U.S. oil and gas production could serve as a backup source of funding for that claims pool, according to a copy of an agreement released by the White House this week.

BP still could face billions of dollars of additional penalties as a result of the Gulf spill. The Justice Department is conducting parallel criminal and civil investigations, alongside investigators from the Environmental Protection Agency and other federal agencies.

Civil fines under environmental laws could theoretically reach $4,300 per barrel of oil spilled if gross negligence is found. The U.S. government recently estimated that 4.9 million barrels of crude spilled into the Gulf during the three-month-long gusher.

BP also faces the possibility that Congress will pass proposed bills that would bar the company from obtaining future offshore drilling leases for five years.

Six months after the March 2005 blast at the Texas City refinery, OSHA fined BP $21 million, a then-record fine for the agency. OSHA and BP also reached an agreement in 2005 requiring BP to correct safety deficiencies at the refinery.

The Justice Department levied a separate $50 million criminal fine—the largest ever assessed against a corporation for violating the Clean Air Act.

But in a follow-up investigation in 2009, OSHA found BP had failed to live up to the agreement by not fixing many of the Texas City facility's safety problems. It slapped BP with $56.7 million in penalties for "failure to abate," but later reduced that to the $50.6 million agreed upon Thursday, after finding it had inadvertently duplicated some citations.

OSHA also identified 439 new violations that led to additional penalties of nearly $31 million. Those are the penalties that are still under discussion.

OSHA's inspectors expressed anger that many of the problems identified during the investigation concerned pressure-relief systems—equipment whose failure had contributed to the 2005 blast.

BP contested the citations and spent months negotiating with OSHA on the fines. BP and OSHA will now enter settlement negotiations to discuss the nearly $31 million in fines.

Texas Sues BP over Air Pollution

The Houston Chronicle

BP, already reeling from legal and financial fallout over its Gulf oil spill, now faces a lawsuit by the state attorney general alleging continued pollution at the Texas City refinery where an explosion killed 15 workers in 2005.

BP illegally emitted 500,000 pounds of air contaminants at its Texas City refinery over a recent 40-day period, and poor operating practices have caused "egregious" pollution at the plant over much of the past decade, the state of Texas alleged in a lawsuit Monday.

Attorney General Greg Abbott's office said it will seek civil penalties against BP Products North America, BP's refining division, for each violation of the state's air-quality laws — penalties that could reach into millions of dollars.

And if the state prevails, it also could jeopardize BP's federal probation for a criminal conviction related to a deadly explosion at the plant five years ago, subjecting the company to further criminal prosecutions for previous offenses and bringing more government oversight to the refinery, said James Nebout, a Houston trial attorney who has sued BP multiple times.

"That has got to be BP's biggest worry right now," Nebout said.

Texas City residents have been on edge since word began to circulate last month that the company reported intentionally releasing pollutants from the country's third-largest oil refinery after a fire April 6. The blaze compromised a seal in a hydrogen compressor used in conjunction with the refinery's ultracracker.

BP isn't accused of failing to disclose the unauthorized pollution release.

Last week, before the state went to court, thousands of workers and residents signed up as plaintiffs in lawsuits alleging they were sickened by the prolonged exposure to the chemicals. Emissions included 17,000 pounds of the known carcinogen benzene, along with large amounts of carbon monoxide and nitrogen oxides.

The new complaint by Abbott is the second the state has brought against the company in as many years and comes as the company faces billions in liabilities arising from the fatal Deepwater Horizon rig explosion and Gulf oil spill. The company said Monday it so far has spent $6.1 billion on spill cleanup efforts.

BP spokesman Scott Dean said the company will continue to cooperate with the Attorney General's Office and the Texas Commission on Environmental Quality to resolve their concerns.

BP maintains air-quality monitors did not show elevated readings or ground-level impact of benzene and other substances.

But Neil Carman, an air-quality expert with the Sierra Club's Lone Star chapter, said the release was unusually large given that most unauthorized releases typically range from 5,000 to 10,000 pounds.

"Rarely do we see releases surpassing 100,000 pounds, let alone 500,000 pounds," Carman said.
 

History of violations

In its complaint, the attorney general cites 15 of the same violations it did last year, when it alleged shoddy operations and maintenance practices at the plant led to a series of harmful releases between 2000 and 2007, including one linked to the March 2005 explosion that killed 15 workers.

Monday's suit adds 39 other unauthorized pollution events to establish what it claims is a history of repeated violations and pattern of bad practices.

The suit follows an investigation by the environmental commission, which cited the company for an "excessive emissions event" following the April fire.

The compressor was shut down and gases rerouted to a flare, which burned for 40 days. Chemicals also were released. BP told regulators that the fire likely was caused by liquids present in the compressor seal or by iron sulfide contamination and acknowledged that periodic equipment cleaning might have prevented the incident.

The state's suit alleges that BP put profits over environmental compliance because it continued to run the ultracracker and other units while the compressor was out, allowing pollutants to escape.

"BP made very little attempt to minimize the emission of air contaminants caused by its actions," the complaint reads.
 

Compressor trouble

The complaint also points out that the company has had previous trouble with the hydrogen compressor, saying the same equipment was involved in seven of 72 violations following the 2005 explosion.

The Texas Commission on Environmental Quality said chemical concentrations in the air resulting from the April-May release did not exceed state or federal standards but that regulators could not determine the short-term health effects.

Last week, Houston lawyer Tony Buzbee filed a $10 billion class-action lawsuit against the company alleging more than 2,000 people suffered health problems because of the incident.

BP Spill Lawsuits Might Be Combined, Resolved in Three Months, Lawyer Says

Bloomberg

 

 

About 200 attorneys suing BP Plc over the Gulf of Mexico oil spill met in a New Orleans hotel to devise a strategy for resolving virtually all spill litigation within three months, a lawyer said.

Daniel Becnel, the lawyer who called the meeting, has asked a federal judicial panel in Washington to combine thousands of claims by commercial fishermen, shrimpers, property owners, seafood processors and tourism-related businesses into a single multidistrict case before one judge in New Orleans. That could keep the lawsuits from dragging on for years and would get badly needed cash into victims’ hands, Becnel said.

“We’re not going to have a long march to trial,” Becnel said yesterday in an interview before the meeting. “This could all be over in 90 days.”

Becnel represents hundreds of individuals and businesses claiming damages from the oil slick created by the April 20 explosion of the Deepwater Horizon drilling rig, which burned and sank about 40 miles off the Louisiana coast.

More than 70 lawsuits, almost all class action lawsuits potentially involving thousands of claims, have been filed against BP, which owned the offshore lease where the damaged well is now gushing at least 5,000 barrels of oil a day.

Defendant Companies

Also named as defendants in most of the suits are: Transocean Ltd., which owned the rig; Cameron International Corp., which supplied the blowout prevention equipment on the well; and Halliburton Energy Services Inc., which was providing cementing services to the well. None of the companies has accepted liability for the accident. BP Chief Executive Officer Tony Hayward has said the company will clean up the oil and pay “all legitimate claims.”

David Nicholas, a BP spokesman, said in an e-mail yesterday that the company doesn’t comment on litigation or potential litigation.

Becnel asked the judicial panel to expedite his request to combine the cases before one of three New Orleans judges, all of whom have experience with multidistrict litigation.

Brent Coon, a lawyer from Houston, described the meeting, held behind closed doors, as productive.

“Whenever lawyers get together to cooperate, the clients benefit,” he said in an interview after the meeting.

Becnel previously advocated combining lawsuits over Merck & Co.’s Vioxx painkiller as well suits by homeowners over toxic drywall made in China. Both of those combined cases are being handled by federal judges in Louisiana.

If the spill cases are combined, Becnel said he will immediately ask the judge for summary judgment in favor of damaged businesses and property owners.

“At that stage, what in the hell do I have to prove, because my clients were clearly damaged by the spill,” Becnel said.

The MDL request was made in Acy J. Cooper Jr. v. BP Plc, 2:10-cv-01229, U.S. District Court, Eastern District of Louisiana (New Orleans).