Business
6:33 am
Thu November 29, 2012

Contract Ban, Civil Litigation Add To BP's Woes

Originally published on Thu November 29, 2012 8:18 am

Transcript

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It's MORNING EDITION, from NPR News. I'm David Greene.

RENEE MONTAGNE, HOST:

And I'm Renee Montagne.

The multinational oil firm BP is being taken to account for the massive 2010 spill in the Gulf of Mexico. Yesterday, the Obama administration banned BP from any new contacts with the federal government, citing, quote, "a lack of business integrity" related to the spill - that after BP admitted criminal wrongdoing in its recent settlement with the U.S. Justice Department.

But that's not the end of it for BP. Far more money could be at stake in an upcoming civil litigation stemming from what was the worst environmental disaster in American history. NPR's Debbie Elliott reports.

DEBBIE ELLIOTT, BYLINE: BP's tab is already staggering. So far, the firm has agreed to pay four-and-a-half billion dollars in its criminal deal with the federal government. A separate civil settlement with private oil spill victims is worth an estimated 7.8 billion. Still outstanding are civil lawsuits brought by Gulf states and the Justice Department, set to go to trial in February.

With each new settlement, BP is eliminating the cloud of uncertainty that has hung over the company since its well blew, killing 11 rig workers, gushing nearly five million barrels of oil into the Gulf, and fouling beaches and wetlands in a five-state region. At issue is how to put a price tag on that.

AARON VILES: We don't know, you know, how much it will cost to fix what BP has done to this ecosystem.

ELLIOTT: Aaron Viles with the Gulf Restoration Network in New Orleans says no one knows the long-term consequences for the Gulf.

VILES: The oil's not gone. The disaster isn't over, and the science isn't settled in terms of how much of an impact it's had.

ELLIOTT: If a judge determines there was gross negligence - which the government alleges - BP could be fined nearly $20 billion under the Clean Water Act. Additionally, BP is responsible under the Oil Pollution Act for restoring natural resources back to pre-spill condition, a process known as NRDA: the Natural Resource Damage Assessment.

Already, Gulf states are pushing the Justice Department to fashion a settlement that might benefit them the most. Viles says because its coast took on the most oil, Louisiana might fare the best under NRDA. But Congress passed the Restore Act, a law that returns 80 percent of Clean Water Act fines back to the region for state and local officials to spend as they see fit.

Some officials are worried the Justice Department will work around the Restore Act and shift settlement money to cover mostly natural resource damage, money that would be under the control of the federal government.

Mayor Robert Craft of Gulf Shores, Alabama says that would hamper the recovery in his tourism-based community.

MAYOR ROBERT CRAFT: Meaning that it is an environmental pot only, and that in our particular instance and in a lot of the areas here, we have economic damage that we're trying to recover from. That money doesn't allow us economic. The beauty of the Restore Act is it's broad. It has economic and environmental monies within it. And so the more money we can put into restore, the more problems we can solve.

ELLIOTT: But with only elected officials and no environmental representation on the panel that will determine where the Restore Act pot of money is spent, critics fear road and bridge-building will be given priority over ecological projects. That makes it tricky for negotiators, says University of Michigan law school professor David Uhlmann, a former chief of the Justice Department's environmental crime section.

DAVID UHLMANN: It's a challenge for the government. You know, how do you balance civil penalties that can be used for more than just restoration with natural resource damage claims that only can be used to benefit the environment and ecosystem that has been harmed?

ELLIOTT: Uhlmann says it's no surprise - with this much in potential penalties at stake - there's infighting over who controls the money. For people on the Gulf Coast still struggling to come back from the spill, resolution can't come soon enough. Mike Voisin is a seventh-generation oysterman in Houma, Louisiana.

MIKE VOISIN: I remember when we were waiting for the well to be capped, and they tried all these various methods to do it, and each time there was this kind of a disappointment. And then finally, when they capped it, it was like a relief. So as we move forward with each of these settlements, it's kind of that same relief. It's behind us. We can get back to some normalcy and our communities can settle down.

ELLIOTT: Although talks have been ongoing, BP, state attorneys general, and the Justice Department say they're prepared to fight the civil case at trial.

Debbie Elliott, NPR News. Transcript provided by NPR, Copyright NPR.