Posted 6 months ago on Aug. 21, 2013, 4:24 a.m. EST by alenkaberg
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LONDON (Reuters) - BP's hard-line legal tactics aimed at capping the financial blowout from the 2010 Gulf of Mexico oil disaster will backfire, according to Joe Rice, negotiator of last year's settlement on behalf of over 100,000 compensation claimants.
Until six months ago, the British oil company sought to co-operate and negotiate its way through the web of litigation spun around it by government bodies, private individuals and businesses.
It pleaded guilty to criminal misconduct in November 2012, having agreed in March the same year to a compensation settlement with the Plaintiffs' Steering Committee (PSC) on which Rice sits.
But with $42.4 billion so far spent or earmarked for spending on clean-up, compensation payments, fines and costs, and with assets that generated $5 billion of cash flow a year sold to pay that bill, BP's management finds itself still a long way from the financial "closure" it craves, and so has changed tack.
In February it gave up hope of settling the civil charges that could add tens of billions more to its bill, and a trial began in New Orleans under judge Carl Barbier. The second phase of that trial is due to start on Sept 30 with federal charges brought under the Clean Water Act and damage claims sought by Gulf Coast states at stake.
Then in March as its bill began to overshoot estimated costs, BP began to contest the way payouts were being made under the PSC settlement - saying too many undeserving claims were getting through, calling some of them "fictitious" and "absurd".
It failed to convince Barbier. Participants await the outcome of a one-day appeal hearing on July 8 at The U.S. Fifth Circuit Court of Appeal, also in New Orleans.
BP has also baulked at paying claims administrator Patrick Juneau's costs, has expressed concern at the amount of money being made by lawyers, and launched its own "fraud hotline" after allegations of misconduct in the payout process.
Then this week, it began a separate lawsuit against the Environmental Protection Agency (EPA), seeking to lift its exclusion from bidding for new federal contracts following its criminal conviction in November.
BATTLE OF NEW ORLEANS
At a quarterly results presentation on July 30, BP's chief executive Bob Dudley, himself an American, said the U.S. legal system needed reform and that BP was "digging in ... for the long-haul on legal matters" over the spill, which killed 11 people and caused the United States' worst offshore environmental disaster.
"We're going back to the 1814 attack on New Orleans by the British," Rice told Reuters by telephone in a reference to a Christmas-time campaign at the end of the 1812-1815 war. Hard-pressed U.S. forces were victorious in the ensuing Battle of New Orleans on Jan 8, 1815, the inspiration for Johnny Horton's eponymous 1959 hit song.
"They're attacking our entire judicial system. They're attacking the judge. They're attacking the claims administrator they helped appoint. They're attacking the lawyers for representing people. Now they've filed an attack on the U.S. government demanding that they do business with them.
"In our view, BP views us as a colony that they own and can exploit. It's outrageous."
In response, BP called Rice's words "xenophobic" and said it was "defending its rights".
Rice, of the law firm Motley Rice, is a veteran of the largest civil settlement in U.S. history, in which the tobacco industry agreed to reimburse states for smoking-related health costs.
He says BP has done itself no favors by using language about "fictitious", "absurd" and "inflated" compensation claims.
"I think they've made a vast strategic error by fighting and shifting this whole battle to an attack on the people of the Gulf," Rice said. "Any goodwill they built on trying to do the right thing, they have destroyed ... Now more people are going to file claims and it's going to make the whole process worse."