NYTimes: Halliburton to Pay $1.1 Billion to Settle Damages in Gulf of Mexico Oil Spill


Halliburton, the company contracted by BP to cement the ill-fated Macondo oil well in the Gulf of Mexico, has reached a $1.1 billion settlement with thousands of businesses, individuals and local governments that suffered losses from the 2010 Deepwater Horizon oil rig explosion, the company and plaintiffs announced on Tuesday.

The settlement represents a small fraction of the damages paid out by the companies involved in the accident, which left 11 workers dead, spilled millions of gallons of oil into the gulf and soiled hundreds of miles of beaches. But it goes a long way toward resolving Halliburton’s exposure to liability claims.

Had the cement Halliburton mixed and applied to the well been sturdy enough, the worst offshore oil spill in American history would probably not have occurred, according to several studies of the accident. Four years after the disaster, Halliburton and BP continue to dispute which company was responsible for the faulty cement job.

The settlement agreement was long expected since the oil service company pleaded guilty to a criminal charge of destroying evidence last year. The company had set aside $1.3 billion to cover losses from litigation.

Lawyers for the plaintiffs seized on the settlement as a victory, as they continue to battle with BP in the courts for much larger stakes. BP has paid out $28 billion in claims for oil spill costs, and it faces an additional potential liability of billions of dollars more as a Federal District Court judge in New Orleans decides how to assign blame to Halliburton, BP and Transocean, the rig owner, in the coming months.

“Halliburton stepped up to the plate and agreed to provide a fair measure of compensation to people and businesses harmed in the wake of the Deepwater Horizon tragedy,” said Stephen Herman and James Roy, the leaders of the steering committee for the plaintiffs, in a statement.

On its website, Halliburton announced the settlement in broad terms without additional comments from executives. The company has long argued that it prepared the cement for the well according to BP specifications and that Transocean neglected to properly test the cement, as the three companies most directly involved in the accident tried to shift blame to one another during legal proceedings.

In a statement later on Tuesday, Halliburton said, “An agreement denies liability; it is not an admission of liability.”

Legal scholars following the case said that Halliburton was making a calculated judgment that it was preferable to agree to pay the relatively modest $1.1 billion than face larger liabilities in the future. They said the settlement should resolve most of Halliburton’s remaining liability for the spill, even if the company is found to have been grossly negligent by Judge Carl J. Barbier of Federal District Court in New Orleans. 

“It also allows Halliburton to put the oil spill — especially its litigation costs, uncertainty and adverse publicity — behind the company,” said Carl Tobias, a law professor at the University of Richmond, “so that it can concentrate efforts on creating innovative technology and increasing market share.”

David Uhlmann, a law professor at the University of Michigan and a former chief of the Justice Department’s environmental crimes section, said that while Halliburton “does not admit liability in the settlement, the company would never have agreed to pay more than a billion dollars unless there was substantial evidence that it was negligent.”

The settlement, which is subject to approval by the federal court in Louisiana, will be paid into a trust in installments over the next two years. 

BP could potentially face up to $18 billion in penalties under the Clean Water Act depending on how much oil Judge Barbier decides was spilled and whether he rules that the company was grossly negligent. BP has acknowledged responsibility but said it shared that responsibility with the other companies and was not negligent.

A trial to decide financial penalties is scheduled to begin in January, the third phase of a nonjury proceeding. Anadarko Petroleum, which owned a 25 percent stake in the well, could also be fined for Clean Water Act penalties.

BP already pleaded guilty to manslaughter and other charges and agreed to pay $4 billion in criminal penalties. BP reached a settlement with plaintiffs but has skirmished in court over interpretations of the settlement, claiming undeserving plaintiffs were receiving payments. Last month, the company asked the Supreme Court to throw out part of the settlement of claims for damages, after a federal appeals court upheld the settlement.

On Tuesday, BP filed a motion requesting that the Federal District Court in New Orleans remove Patrick Juneau as the claims administrator, charging that he had not disclosed that he had been an advocate for claimants before he was appointed as claims administrator in 2012. It was the latest salvo in BP’s efforts to discredit Mr. Juneau.

Transocean already agreed to pay $1.4 billion to settle government charges, and it also faces potentially higher penalties in Judge Barbier’s court.

BP hailed the Halliburton settlement and strongly criticized the service company.

“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,” Geoff Morrell, a BP senior vice president, said in an emailed statement. “The evidentiary record demonstrates that Halliburton recommended and pumped an unstable cement slurry; intentionally destroyed and failed to produce uniquely relevant evidence showing the slurry to be unstable; and failed to properly monitor the well and detect the influx of hydrocarbons.”

Halliburton replied in a statement: “Halliburton denies all allegations of any wrongdoing, fault, noncompliance, liability; denies that it acted improperly in any way; and denies that it caused any damage or loss arising out of, due to, resulting from, or relating in any way to, directly or indirectly, the Deepwater Horizon incident.”

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