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BP spill trial postponed as settlement talks make progress

U.S. Coast Guard via AP

Fire boat response crews spray water on the burning remnants of BP's Deepwater Horizon offshore oil rig on April 21, 2010.

BP and lawyers for tens of thousands of businesses and individuals hit by the 2010 gulf oil spill were trying to work out a settlement on Monday after a judge delayed the start of the trial by a week.

Citing three people familiar with the talks, Bloomberg news agency reported Monday that BP and the plaintiffs were discussing a $14 billion settlement.

"I had almost given up on the possibility of a global settlement before a trial began," Edward Sherman, a professor at Tulane University Law School and specialist in complex litigation, said Sunday. "Now, with an extra week, it seems to improve the chances."

A settlement could also be a key step toward BP reaching a broader settlement with its drilling partners, and with federal and state governments.

During a conference call between BP and a plaintiffs steering committee on Sunday, U.S. District Judge Carl Barbier cited "some progress" in settlement talks, two people close to the case told The Associated Press.

BP and the committee in a joint news release said they were working to reach an agreement that would "fairly compensate people and businesses affected by the Deepwater Horizon accident and oil spill."

The massive scope of the case — a maze of claims and counterclaims between the companies, federal and state governments and plaintiffs' attorneys — has elicited comparisons to the tobacco litigation of the 1990s.

Democratic strategist David Goodfriend argues the Justice Department should take a tough stand against BP even if businesses and individuals reach a settlement.

Mountains of legal briefs
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.

Bloomberg's sources said under the proposed settlement BP would close its $20 billion Gulf Coast Claims Facility and shift the facility's remaining $14 billion to the plaintiffs.

The steering committee is overseeing lawsuits filed by individuals and businesses following the explosion on the Deepwater Horizon rig on April 20, 2010, in the Gulf of Mexico. The blast killed 11 workers and injured 17, and led to 206 million gallons of oil spewing from the blown-out well, soiling miles of coastline.

Even with a settlement, much work would remain:

  • The U.S. government has sued BP and others for violating the Clean Water Act and other laws, which could result in fines totaling tens of billions of dollars.
  • Gulf states are also seeking compensation for their losses.
  • BP is also suing and being sued by its drilling partners.

Apart from BP, which owned 65 percent of the Macondo well, the main corporate defendants are Transocean, which owned the Deepwater Horizon rig, and Halliburton, which provided cementing services for the well. Several other companies are also involved in the trial.

BP has accepted responsibility for the disaster, and estimated its legal and cleanup costs for the spill will total $43 billion. Some analysts have said that figure could top $60 billion, especially if there were a finding that its activities at the project were "grossly negligent."

Earlier this month, BP said it had set aside $6.1 billion to cover claims by businesses. Lawyers for those plaintiffs said the amount was too low, and that BP should also award punitive damages, which the oil company says are not warranted.

Many industry analysts and experts say a quick settlement is in BP's best interest. 

If no settlement is reached, Barbier will preside over a three-phase, non-jury trial that could last the better part of a year. The first phase is designed to identify the causes of the deadly blowout and to assign percentages of fault to the companies involved in the ill-fated drilling project.

Financial analysts estimate BP could wind up paying anywhere from $15 billion to $30 billion over the lawsuits.

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.

The decisions and actions that led to the explosion and spill already have been painstakingly investigated by the Coast Guard, federal regulators and a presidential commission. Their probes concluded that BP, Transocean and Halliburton deserve to share the blame for a string of risky decisions that were designed to save time and money.

Separately, BP has had discussions in recent days with the federal government and cement contractor Halliburton, according to several people close to the case.

Families of crew who died have other needs
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?"

A BP spokesman said the company has expressed its sympathies to the victims' families from the outset. In a press release less than a week after the explosion, former BP CEO Tony Hayward said: "We owe a lot to everyone who works on offshore facilities around the world and no words can express the sorrow and pain when such a tragic incident happens."

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."

The Associated Press and Reuters contributed to this report.

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