Bloomberg has managed to get the only leak about the negotiations themselves. It sounds like there are some extremely legitimate concerns that have yet to be addressed nor is the mechanism for reaching a final settlement made clear.
What is most worrisome is the possibility that the plaintiffs’ steering committee and BP will cut a deal where the lawyers make out like bandits while hurling BP's victims to the back of the bus. That is exactly what happened with Feinberg and the Gulf Coast Claims Facility.
BP Said to Weigh $14 Billion Settlement of Spill Claims
Feb. 27 (Bloomberg) -- BP Plc and lawyers for businesses and individuals suing over the 2010 Gulf of Mexico oil spill are near a $14 billion accord to be funded with money set aside for out-of-court settlements, according to three people familiar with the talks.
BP would close its $20 billion Gulf Coast Claims Facility and shift the remaining $14 billion to plaintiffs hurt by the disaster, the largest offshore spill in U.S. history, the people said. Such a deal wouldn't include fines by the federal government that could reach $17.6 billion, lawsuits by state governments or claims between BP and partner companies involved in the disaster. BP shares rose almost 2 percent on news of the potential deal to their highest point in more than a year.
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"They could be about 90 or 95 percent done and now they have to go that last yard, which is always the toughest," Carl Tobias, who teaches mass-tort law at the University of Richmond in Virginia, said of the proposed accord. "There could be an awful lot of money that is still in play or provisions that are hard to swallow for one side or the other."
The discussions between the plaintiffs and BP are nearing completion, said the people, who declined to be identified because they weren't authorized to speak publicly.
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BP shares rose 1.1 percent to 501.70 pence in London trading.
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The proposed $14 billion agreement would be separate from BP's talks with the government, the people [familiar with the discussions] said.
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U.S. District Judge Carl Barbier, who would preside over the trial now scheduled to start March 5, would decide whether BP can demand other firms involved in the spill help pick up the tab for the estimated $26 billion in costs spawned by the destruction of the Deepwater Horizon.
If there isn't a deal reached by all sides, the judge must determine whether the companies should pay punitive damages to thousands of business and property owners, and fines to the government for polluting the Gulf of Mexico.
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The proposed settlement with the non-governmental plaintiffs would allow lawyers to use the claims fund to set up a system for compensating spill victims based on the type of harm they suffered, the people familiar with the talks said. The system may be similar to those used to decide recoveries in class-action cases, they said.
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Attorneys for some victims argued in court filings that officials of the fund, run by Washington-based lawyer Kenneth Feinberg, used "coercive tactics" to force business and property owners to accept inadequate payments for their claims and give up their rights to sue. Feinberg, chosen to run the claims fund by BP in 2010, declined to comment on the proposed settlement.
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One of the lead negotiators for the plaintiffs' lawyers group pushing the $14 billion settlement proposal is Joe Rice, a South Carolina-based lawyer who helped craft the 1999 agreement under which Philip Morris and three other cigarette makers agreed to pay states $246 billion for treating smoking-related illnesses, the people familiar with the BP talks said.
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While lawyers for plaintiffs whose cases have been consolidated before Barbier proposed the settlement, attorneys for other spill victims may oppose it as inadequate, the people familiar with the talks said.
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Brent Coon, a Houston-based lawyer representing spill victims both in federal and state courts, said he worries $14 billion won't provide enough compensation for those harmed in the disaster.
"I'm concerned that the $14 billion fund isn't adequate, and I'm concerned that just transferring oversight of the fund to our own group may or may not be enough to solve the problems," he said in an interview.
Plaintiffs' lawyers and the companies still haven't been able to pin down the total number of claims tied to the spill because filing deadlines don't expire for a year, he said.
"The total claims could double from where they are now," Coon said.
Another problem with the settlement proposal is lawyers for the steering committee don't represent the majority of victims in the case, Coon said, which he said raises questions about their ability to act in the best interests of all claimants.
"A very small minority of lawyers are negotiating a deal that leaves them in control of the purse strings and let's them dole it out," he said. "I know a number of lawyers who are extraordinarily hostile to that idea."
I couldn't agree more with Mr. Blanchard that people need to go to jail, including government officials, if we don't won't see more Deepwater Horizon/Macondo tragedies or worse. Government officials making a habit of singing out of BP and big oil hymnals does not serve the public interest in protecting workers and the environment.
'Someone must pay the price'
SATURDAY 25 FEBRUARY 2012
"There's money, and then there's principle," says Dean Blanchard, a hard-bitten Louisiana shrimp wholesaler, explaining why he has refused to take an easy settlement from BP over the gigantic 2010 oil spill that upended the local economy.
"BP's got a lot of money – but they've got very little principle."
Mr Blanchard dominated the local shrimp fishing business, which hauled in some of Southern cooking's most famous seafood, but when the oil came, the fishing stopped and his docks became home to a vast crew of workers attempting to clean up the mess.
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Mr Blanchard is one of almost 120,000 people seeking redress at a complex trial that finally gets under way in New Orleans on Monday.
"Let's take it to court, let the truth come out, and show what BP done to the folks down here," he says. "I worked 30 years to get to this point, and I was finally getting to reap the profits, and then a company that can't run their business comes and destroys mine."
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The most perilous outcome of the current trial for BP would be a finding that it specifically was grossly negligent in its management of the Deepwater Horizon project, something the federal government's lawyers seem determined to argue. According to sealed court documents shown to some journalists, BP knowingly took on additional risks in the construction of the well, botched safety testing and was "cavalier" in its handling of safety decisions, the government will claim.
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BP investors had hoped for a pre-trial settlement, at least between companies involved in the rig's operation. If BP, Halliburton and Transocean settled their differences, they could present a united front against the federal government's claims of gross negligence, Peter Hutton, an analyst at RBC Capital Markets, said.
"If they go in with a consistent story, the need to go into everything in minute detail is diminished."
However, BP has been telling equity analysts that it would not pay any price to avoid a trial, and executives in closed-door meetings specifically squashed talk of a $65bn settlement.
Although there could still be developments over the weekend, it appeared last night that settlement talks had finally broken down.
For all the questions that the trial is slated to answer, it remains an open question whether the people of the Gulf region will feel this is justice.
Mr Blanchard, for one, seems unlikely to dim his rage. "Somebody from the government needs to go to jail. Somebody from the Coast Guard needs to go to jail. Several people from BP need to go to jail. I want to know that the same thing cannot happen again, and I won't be able to say that until somebody pays the price," he said.
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February 27, 2012
I couldn't agree more with the families of the 11 men who died on the Deepwater Horizon that their ones have been all but forgotten by the press. Wondering how they feel about a trial versus settlement has been at the forefront of my mind.
On one hand there is the emotional satisfaction of seeing justice served by a trial. On the other hand the families know that a trial that brings back the pain of their horrible losses won't undo the horror that took their loved ones from them.
BP spill trial postponed as settlement talks make progress
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Roughly 340 plaintiffs' lawyers have worked on the case. BP has spent millions of dollars on experts and law firms. More than 300 depositions have been taken. Millions of pages of legal briefs have been filed. One Justice Department lawyer said it would take him 210 years to read all the pages submitted into the record if he read 1,000 pages a day.
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An AP analysis found that the company could conceivably face up to $52 billion in environmental fines and compensation if the judge determines the company was grossly negligent.
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Relatives of the 11 killed in the Deepwater Horizon blast say they are hoping for something more elusive: justice for lost loved ones.
Sheryl Revette, whose husband, Dewey, worked for Transocean and was among the 11 killed, doesn't have anything to gain financially from the trial. She wants an apology from the oil giant, something she said she hasn't received yet, even though she settled her claims against BP last year.
"I've never heard a word from them," said Revette, 48, of State Line, Miss. "But an apology isn't going to bring my husband back."
From the beginning of the disaster, many relatives of workers who died on the rig have felt that their tragic losses were unjustly overshadowed by corporate finger-pointing, legal wrangling, and concerns about the spill's environmental and economic impact along the Gulf Coast.
"Nobody cares about the 11 men who died," said Arleen Weise, 58, of Yorktown, Texas, whose 24-year-old son, Adam Weise, was killed in the blast. "Did everybody have to forget about those men?"
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Chris Jones, whose brother, Gordon, was also killed on the rig, had planned to drive in from Baton Rouge with other relatives to attend the start of the trial. He said he has mixed feelings about the prospect of a settlement that would eliminate the need for a trial. Jones said he would be disappointed if BP manages to "write a check to solve their problems."
"I was ready to go to trial and see their feet held close to the fire," he said Sunday after learning of the postponement. "It seems like the easy way out to pay whatever the plaintiffs are willing to take."
Jones, an attorney, said he's not surprised that the oil giant would seek to avoid a long, costly trial.
"I know that is part of the game, so to speak," he said. "As long as they're paying a lot of money for the damage they caused, it would give me some relief."
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The most dangerous place in the world is between Billy Nungesser and a television camera or money he can use to further his political career. However, we should all be grateful to him for getting national press attention focused on the current sorry state of environmentally critical Louisiana wetlands for a few precious moments.
There are many residents in Nungesser's parish who basically live off the land. It's hard to imagine how difficult it must be to have to decide whether to starve or eat fish or other wildlife tainted by oil and heavens knows what else. These amazingly self-reliant and hospitable people have been completely ignored by the press. That is our loss and our shame.
BP Oil Spill Trial Postponed
Feb 27, 2012 8:25am
Myrtle Grove, La. – Less than 24 hours before the environmental “trail of the century” was set to begin, the presiding judge, BP and lawyers representing a coalition of plaintiffs agreed to postpone the start a week in order to allow room for a possible settlement, which is a tricky proposition for the oil giant.
“This is the biggest liability suit in the history of the world,” New Orleans environmental litigation attorney Stuart Smith said. “Just writing a check for this is not that easy. The damages are still occurring, and the oil is still washing up on the shores. The challenge for BP to settle now is there are too many moving parts.”
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Some Gulf residents like third generation shrimper Darla Rooks were disappointed., “It’s a shame, this way we’ll never know the truth, what they really did,” noting that a trial would likely uncover secrets BP is trying to bury.
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Recent reports show that the vast majority of the oil in the Gulf of Mexico has dissipated. But black syrupy oil continues to mar Louisiana marshes. Looking out over a withered swath of marshland, layered with salt grass and cane, Plaquemines Parish President Billy Nungesser said, “I just can’t understand how [BP] can say we have done the best we could, we are not going to clean up anymore. That’s unacceptable.”
Nungesser took ABC News on a tour of several at risk barrier islands. When the tide recedes in the area, which had been some of the Gulf’s most fertile fishing grounds, oil blackens the clay-like marsh land closest to the water on some of the islands.
When oil remnants hit the shore line, it kills the grass, making the land beneath it susceptible to erosion. Nungesser claims the oil is accelerating Louisiana marsh erosion.
“This is happening across the whole bay,” Nungesser said. “Whether you got to rake it up, shovel it up or put it in garbage bags. It’s happening underneath the surface. It just takes the right wind and tide and [the oil] washes it up the bottom and dumps it in the marsh.”
Cat Island, a nesting ground for the pelican – the Louisiana state bird was more than twice the size before the spill. Today it’s a single acre and many environmentalist fear by next year it will be gone.
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This Tampa Bay television station is the exception of local news outlets in areas affected by BP's black monster showing much interest in the settlement talks preceding the trial to determine liability. Once would think that reporters from areas impacted by the spill would be converging on New Orleans in hordes but that doesn't appear to be the case.
BP faces billions in fines as spill trial nears | wtsp.com
4:22 PM, Feb 25, 2012
NEW ORLEANS (AP) - On the cusp of trial over the catastrophic 2010 oil spill in the Gulf of Mexico, phalanxes of lawyers, executives and public officials have spent the waning days in settlement talks. Holed up in small groups inside law offices, war rooms and hotel suites in New Orleans and Washington, they are trying to put a number on what BP and its partners in the doomed Macondo well project should pay to make up for the worst offshore spill in U.S. history.
It is a complex equation, and the answer is proving elusive.
The federal government, Gulf states, plaintiffs' attorneys, BP PLC, rig owner Transocean Ltd. and cementer Halliburton Energy Services Inc. have been in simultaneous and separate negotiations in New Orleans, according to a person with direct knowledge of the talks and others who had been briefed on them.
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The biggest stumbling block appeared to be the sheer size and sprawling uncertainty over the unprecedented dollar amounts at stake.
Financial analysts estimate BP's potential settlement payout at $15 billion to roughly $30 billion. The company itself estimated it would cost about $41 billion in the weeks after the explosion to account for all of its costs, including cleanup, compensating businesses, and paying fines and ecological damage.
"This one is off the charts in terms of size and significance," said Eric Schaeffer, the director of the Environmental Integrity Project in Washington and former head of the Environmental Protection Agency's Office of Regulatory Enforcement.
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No matter what, the case is all but guaranteed to set records as the most expensive environmental disaster in history, far surpassing the Exxon Valdez disaster in 1989. Exxon ultimately settled with the U.S. government for $1 billion, which would be about $1.8 billion today.
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And once the civil case is resolved, depending on the scope of any settlement, BP still could face criminal fines; penalties for violations of oil pollution, clean water and wildlife protection laws; and still-pending economic losses due to the partial shutdown of the Gulf. Morgan Stanley analysts estimated criminal fines would come in between $5 billion and $15 billion in any eventual settlement.
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Under the Clean Water Act, which is designed to punish companies and prevent future spills, a polluter pays a minimum of $1,100 per barrel of spilled oil; the fines nearly quadruple for companies found guilty of grossly negligent behavior. Under this statute, BP could owe $5 billion to $21 billion. Transocean and Anadarko Petroleum Corp., a minority owner of the Macondo well, also face paying hefty fines.
One of the biggest questions facing U.S. District Judge Carl Barbier, a maritime law expert presiding over the trial, will be to determine if BP was guilty of gross negligence.
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The Gulf has been soiled by past spills and natural oil seeps, so the oil giant could say it's too hard to pinpoint what is BP damage and what isn't, said Mark Davis, a Tulane University law professor who specializes in water resources.
State and federal lawyers are likely to argue that the damage was extensive and that the Gulf's marine environment is more varied and rich than even that of Prince William Sound, where the Exxon Valdez went aground.
Beyond that, there are more than 110,000 people and businesses - among them large fishing and hotel operations - who have not settled with BP and have outstanding claims against the company. Technically, people have until April 20, 2013, to file claims against BP, which committed to pay $20 billion to cover damage claims and so far has spent about $7 billion.
What makes this trial so good for plaintiffs - and a nightmare for BP, Halliburton and Transocean - is that the spill was a chronicle of corporate failures. Federal investigators have concluded cost-cutting by BP and shoddy work by all three companies caused the blowout.
"It's the perfect case for plaintiffs' lawyers," said Blaine LeCesne, a tort law specialist at Loyola University New Orleans who's analyzed the case. "They have everything to gain by going to trial."
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"How culpable was BP? How bad were they? How bad was the violation and how sloppy was their conduct?" said Schaeffer, the former EPA official. "There are risks for both sides, but they are significantly greater for BP. They don't want this potential of billions of dollars hanging over them."
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