September 3, 2014 10:22:13 AM
NEW ORLEANS -- Halliburton's agreement to pay more than $1 billion to settle numerous claims involving the 2010 BP Gulf of Mexico oil spill could be a way for the company and victims of the spill to avoid years of costly litigation -- if all the pieces fall into place.
A federal judge still has to approve the settlement. That same judge has rulings pending on the extent to which parties, including Halliburton, were negligent in the deadly explosion of the Deepwater Horizon offshore oil rig. Those rulings could affect plaintiffs' decisions on whether to participate in the settlement, which was announced Tuesday.
Pending action by the Supreme Court over interpretations of an earlier BP settlement with businesses also comes into play.
Joe Rice, of the law firm Motley Rice, which has been working for the plaintiffs, doesn't see those as major barriers to the settlement.
"They're not extremely complicated pieces," said Rice. "Whereas the litigation would be extremely complicated."
The settlement involves commercial or subsistence fishermen or hunters whose catches were affected by the spill, and businesses and property owners, including local government entities, who had property touched by the oil. They would be able to collect punitive damages from Halliburton through a fund to be administered by a court-appointed representative. The agreement also would settle claims for a separate class of businesses and individuals who were deemed to have causes of action against Halliburton under BP's 2012 settlement with businesses affected by the spill.
Rice said the settlement, if approved by U.S. District Judge Carl Barbier, would settle most major claims against Halliburton, except those filed by state governments affected by the spill.
Halliburton declined comment on the settlement, other than what was in its brief official statement, which noted that the company had a $1.3 billion loss-contingency provision related to the spill litigation.
RBC Capital Markets analyst Kurt Hallead said Tuesday that, given Halliburton's loss contingency, the settlement shouldn't have a major effect on profits or losses.
The Deepwater Horizon rig exploded on April 20, 2010, killing 11 workers and spewing millions of gallons into the Gulf of Mexico for months. BP leased the rig from Transocean Ltd. Halliburton was in charge of sealing the completed well with cement.
BP issued a statement saying Tuesday's settlement shows that the explosion and spill was the responsibility of multiple parties.
"This settlement marks the very first time -- despite three years of official investigations and litigation implicating the company -- that Halliburton has acknowledged that it played a role in the accident," said the emailed statement from BP spokesman Geoff Morrell.
The deal is contingent upon a minimum number of plaintiffs signing on. If Barbier decides that gross negligence on the part of Halliburton was a major factor in the accident, plaintiffs could decide instead to hold out for a larger award.
Rice, however, downplayed that possibility.
"I don't think that a finding of gross negligence is necessarily fatal to the settlement," Rice said, noting that anyone who rejected the settlement would still face years of costly litigation with no guarantee of victory.
BP's continued fight over the interpretation of its own 2012 settlement with businesses claiming damages from the spill also is a factor in the future of the settlement.
At issue in that case is whether, under the terms of that settlement, businesses have to prove they were directly harmed by the spill in order to collect payments. BP has lost at the district and appellate court level. Attorneys expect to know by late October or November whether the Supreme Court will hear the matter.
Halliburton shares fell 12 cents Tuesday to close at $67.49.
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