BP and US government try for settlement | Environment| All topics from climate change to conservation | DW | 28.02.2012
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Environment

BP and US government try for settlement

BP and the US government are trying to reach a settlement before the trial over the 2010 Deepwater Horizon oil spill disaster. Those affected are hoping BP and the other companies involved pay out to fix the damage.

The pushing back of the BP oil spill trial until March 5 gives the oil company and the US government more time to reach a settlement out of court.

BP faces charges of negligence and violations of the Clean Water Act stemming from the deadly explosion of the Deepwater Horizon drilling rig that leaked 200 million gallons (757 million liters) of oil into the Gulf of Mexico between April and July in 2010. The case set to start next week brings together 535 separate lawsuits.

This image shows the oil leak still pouring out of the well head around the capping device in the Gulf of Mexico

It took 87 days to fix the damaged oil well and prevent the oil from leaking into the Gulf of Mexico

In addition to the settlement talks with the US government, BP is also discussing a possible $14-billion (10-billion-euro) settlement with lawyers who are representing individuals and companies claiming they have been suffered from the massive spill.

According to the Wall Street Journal, the $14 billion could be taken out of a $20 billion compensation fund that was set up nearly two years ago.

Contractors on trial as well

Halliburton, which poured the cement for the well, and Transocean, which owned the drilling rig, are also standing trial with BP as well as other firms such as Nalco, which manufactured the dispersants used to tackle the spill.

The trial comes at an awkward time for BP. It recently raised the dividend that it pays its stockholders by 14 percent based on profits of $23.9 billion last year. Despite these healthy figures, the firm faces as much as $40 billion in fines, according to an estimate quoted in the New York Times.

These fines, however, could be negotiated down if BP reaches a settlement with the plaintiffs, which include the US government and the governments of Gulf Coast states Louisiana, Alabama and Mississippi. Speculation about a settlement increased in the weeks before the trial when newspapers reported on the negotiations taking place between BP and the US government.

Assuming a settlement is not reached before March 5, Carl Barbier, a federal judge in the court for the Eastern District of Louisiana, will preside over the case alone. There will be no jury.

Due to its size, Barbier has divided the case, which could take a year to complete, into three segments.

A Brown Pelican is cleaned from oil

The oil spill had disastrous effects on the environment

The first stage would focus on responsibility for the blast, which killed 11 people, injured 16 others and set in motion the oil leak on the sea floor. The other two segments will deal with the clean-up and the spill's health and environmental impact.

Although BP's contractors Transocean and Halliburton are exempted from third-party liability by the terms of their contracts, they may face punitive damages all the same, said Eric Smith, Associate Director of Tulane University's Energy Institute.

He doubted, however, that Transocean would be found guilty of "gross negligence with malice and intent to cause harm," the upper end of the charges that could be leveled against it.

Reviving damaged ecosystems

US lawmakers have been considering a bill that would allocate the proceeds from fines stemming from the trial. The bill is called the RESTORE Act, which stands for the Resources and Ecosystems Sustainability, Tourist Opportunity, and Revived Economies of the Gulf States Act of 2011.

The bill has received backing from environmental groups because it would allocate a substantial portion of the fines to coastal restoration projects to revive damaged ecosystems.

Yet some environmentalists fear that much of the money could vanish without being put to restoration work.

"Our concern is that if that settlement happens, there's a potential that the Gulf will not get the money," said Cynthia Sartou, Executive Director of the Gulf Restoration Network, a New Orleans-based environmental group.

"We need that money. The damage has not been rectified. In Louisiana particularly, communities are seriously at risk from destruction of wetlands...over decades, related to oil and gas development that fueled the US economy."

BP has won some victories in the rounds of motions and decisions leading up to the trial.

Crews work to clean up oil washed ashore

Damage has not been rectified, environmental groups say

These include a decision not to preclude consideration of BP's prior accidents in the region. They include an explosion at a Texas refinery that killed 15 people and a pipeline leak in Alaska.

Another victory included a ruling that discounts some emails that raised concerns about BP's handling of the Deepwater Horizon both before and after the spill.

Separate compensation

Even before the trial started, BP began paying damage claims to some coastal residents.

At the request of the Obama administration, BP set up the Gulf Coast Claims Fund under the administration of attorney Ken Feinberg, who also ran the fund for those affected by the September 11 terrorist attacks.

This fund has paid out roughly $6 billion to an estimated 225,000 claimants. Activists from the region say, however, that there have been many problems with the claims process, including wide variations in payments for people with similar experiences.

Author: Zoe Sullivan
Editor: Holly Fox

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