Bloomberg News

BP Spill Trial Shouldn’t Be Delayed by Accord, U.S. Tells Judge

May 02, 2012

The U.S. government said the trial over fault for the 2010 BP Plc (BP/) Gulf of Mexico oil spill shouldn’t be delayed until after a proposed November hearing on a settlement of most private-party claims.

BP and some parties suing the company over the spill filed a proposed settlement agreement April 18 with U.S. District Judge Carl Barbier in New Orleans for preliminary approval. They asked Barbier to hold a Nov. 8 fairness hearing before final approval of the accord and to postpone any trial on liability until after that hearing.

BP’s proposed partial resolution of private claims “should not allow it to impede trial and resolution of the broader public interests represented by the United States and the states,” Justice Department attorneys said in a court filing yesterday. The trial on liability for the spill should begin “no later than summer of 2012,” the U.S. said.

The state of Alabama yesterday filed a similar objection to the proposed delay in the trial. Alabama Attorney General Luther Strange asked Barbier to set a trial date for the liability phase for July 16. The judge said he would consider BP’s request for postponing the trial at a closed-door hearing May 3.

Barbier heard arguments for preliminary approval of the proposed settlement last week. He hasn’t yet issued a decision. He said at the hearing that he was “leaning” toward approval.

Worst Spill

The blowout and explosion on the Deepwater Horizon drilling rig killed 11 workers and caused the worst offshore oil spill in U.S. history. In response, President Barack Obama imposed a moratorium on deep-water drilling.

BP agreed in March to pay an estimated $7.8 billion to resolve private plaintiffs’ claims for economic loss, property damage, and spill and pollution-related injuries. The settlement, reached March 2, days before a scheduled trial on liability for the 2010 spill, doesn’t cover federal government claims and those of the Gulf Coast states Louisiana and Alabama.

Also excluded are claims by financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from the drilling moratorium.

The accident prompted hundreds of lawsuits against London- based BP; Transocean Ltd. (RIG:US), the Vernier, Switzerland-based owner and operator of the rig; and Houston-based Halliburton Co. (HAL:US), which provided cementing services. Those claims remain pending following the proposed settlement.

U.S. Lawsuits

The U.S. sued BP, Transocean and BP’s partners in the well, Mitsui & Co. (8031)’s MOEX Offshore 2007 and The Woodlands, Texas-based Anadarko Petroleum Corp. (APC:US), alleging violations of federal pollution laws. MOEX has settled the federal claims.

“The timing of these proceedings has yet to be determined,” Lou Colasuonno, Transocean’s spill-litigation spokesman, said in a telephone interview. “But one thing is clear. We are confident in our case whenever we go to trial.”

BP spokesman Scott Dean said in an e-mailed statement that the company has no comment beyond what it said in its own court filings seeking a delay in the liability phase of the trial until after the fairness hearing.

“The fact that BP has not requested a complete stay of all litigation counsels in favor of granting this request,” lawyers for BP and the Plaintiffs Steering Committee said in an April 18 filing. “Indeed, it is routine for courts to grant a complete stay of all proceedings until after the fairness hearing -- relief that goes far beyond what BP is seeking here,” they said in the filing.

Beverly Stafford, a Halliburton spokeswoman, had no immediate comment.

‘Delay Recovery’

The proposed delay of the liability trial “will inevitably delay recovery and restoration for fragile Gulf resources,” Justice Department lawyers said yesterday. “Under the proposals of defendants like BP, a matter ready for trial will sit and wait -- untried -- for close to one year or maybe more.”

The settlement process with private parties “need not preclude trial of the broader government claims,” they said in the filing.

If Barbier grants a delay, Alabama wants the new trial date to be set for Nov. 26, Strange said. The first trial should include BP’s liability for the spill, even amid settlements with private plaintiffs, he said.

“BP is the primary defendant,” Strange said. “It would be virtually impossible to try a liability case without BP. BP’s fault for the explosion and resulting spill is intertwined with the fault of their co-defendants.”

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • RIG
    (Transocean Ltd)
    • $18.77 USD
    • -0.37
    • -1.97%
  • HAL
    (Halliburton Co)
    • $39.7 USD
    • -0.18
    • -0.45%
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