In a much-publicized appeal to the Fifth Circuit, BP claimed the Settlement Agreement required all revenues and “corresponding” expenses to be matched – regardless of whether the claimant kept its books on an accrual or cash basis. The company also argued that where spikes in revenue occurred in a claimant’s records, those spikes should be smoothed out (also known as the “smoothing” argument). Judge Clement wrote the majority opinion, and was joined by Judge Southwick on the matching and smoothing issues. Judge Dennis wrote the dissenting opinion.
The Court overruled BP’s smoothing argument and remanded the matching appeal to Judge Barbier for further clarification. On remand, the Court directed Judge Barbier to clarify whether all claims should be matched and, if so, how the matching analysis would apply. While the Court worked out the details, the Fifth Circuit ordered that Judge Barbier issue a “narrowly tailored” preliminary injunction. Judge Barbier immediately issued a temporary stay on the issuance of any final determination notices or payments on certain business economic loss (BEL) claims within the Program.
In the meantime, the Court conferred with and received input from the parties, including in camera proposed preliminary injunctions. Ultimately, the Court disagreed with the Plaintiffs’ Steering Committee as “under-inclusive”, and BP as “over-inclusive.” Instead, the Court ordered Claims Administrator Pat Juneau (among other things) to process and pay all business economic loss claims “presented on the basis of ‘properly matched accrual-basis records,’ which are ‘claims supported by sufficiently matched, accrual basis accounting.’” All other business economic loss claims will be temporarily stayed, and the Claims Administrator is to provide a declaration outlining the matching criteria within seven days of the Court’s Oct. 18, 2013, Order.
Hypocrisy At Its Best
In an ironic twist, BP CEO Bob Dudley chastised the Indian Government recently for not honoring the signed contracts Dudley claims the two parties agreed to. BP is threatening India’s current oil minister that if the country doesn’t see things BP’s way, the oil giant will halt its investments in oil to the country. Meanwhile, in the United States, BP has mounted a multi-million dollar public campaign to renege on its signed settlement agreement with the Plaintiffs’ Steering Committee and the Gulf Coast.
What the company has done in an attempt to destroy its settlement with the PSC is nothing short of unprecedented. BP is systematically picking on key portions of the settlement with businesses to uncover ambiguities – portions the company supported in open court after negotiating them for months with a high-powered cast of experts and lawyers. The company is hopeful that with enough prodding and manufactured argument, a court will listen and render the settlement unenforceable. All the while, the company’s website lauds its “commitments” and “relentless focus on safety … [as a] top priority for everyone at BP.” Hypocrisy, it seems, knows no bounds at the headquarters of BP.
A Close Look At BP’s Record
Given BP’s antics in the media lately, any real progress the company has made to repair its image has seemingly dissipated. The public has learned that BP was a convicted felon on probation for three prior disasters just before the explosion that killed 11 workers aboard the Deepwater Horizon drilling rig. In one of those disasters, a Texas City oil refinery owned by the company exploded and killed 15 workers and injured another 170. At that time, the company was cited for hundreds of safety violations – including outdated equipment, inoperable safety alarms and level sensors.
The U.S. Occupational Safety and Health Administration (OSHA) levied more fines on BP when the agency discovered the company had failed to implement appropriate safety improvements at the refinery after the explosion.
In fact, the refinery (which was loaded with explosive petroleum chemicals and had more than 100 employees working at the facility) was so poorly maintained and lacking in capital investment that the Telos Group, a consulting firm hired to examine conditions at the plant, said only two months before the disaster: “We have never seen a site where the notion ‘I could die today’ was so real.” Investigations of the explosion were scathing. The United States Chemical Safety Board concluded that the explosion was “caused by organizational and safety deficiencies at all levels of BP.” Sound familiar?
Even after the Texas City explosion and all the promises for increased safety, the company’s colors showed again – this time in Prudhoe Bay, Alaska. The company was responsible for the worst oil spill ever on the North Slope (267,000 gallons of oil) and, again, the cause was preventable. The piping system was heavily corroded, under maintained and poorly inspected. In 2005, BP almost lost another rig, the Thunder Horse, due to the company’s rush to put the rig online to impress its shareholders. The cause? A very simple check valve was installed backward and caused water to flood into, rather than out, of the rig. Before the platform went active, BP discovered rudimentary mistakes in the welding of pipes that caused dangerous cracks and breaks. Had the well gone active, the Deepwater Horizon oil spill would have likely been BP’s second major offshore oil spill.
Recently, the company was suspended from doing business with the US government for a lack of corporate integrity, pled guilty to 11 counts of manslaughter for the Deepwater Horizon oil spill, and lied to the Federal Government about the disaster. Remembering who BP is as a company will tell you a lot about where the company’s intentions lie.
Criminal Pleas Continue In The Deepwater Horizon Oil Spill Case
Anthony Badalamenti, who had been a cementing technology director for Halliburton Energy Services Group, pled guilty last month to destroying evidence in the aftermath of the Deepwater Horizon oil spill. Prosecutors claimed that Badalamenti ordered two Halliburton employees to delete data during a post-spill review of the cement job on BP’s blown-out Macondo well. The Court had already accepted a separate guilty plea agreement from Halliburton, whereby the company agreed to pay a $200,000 fine for a misdemeanor stemming from Badalamenti’s conduct. In addition, Halliburton agreed to a three-year probationary period, and to make a $55-million contribution to the National Fish and Wildlife Foundation.
Source: New York Times
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