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White House Says Penalties For Oil Spill To Exceed "Many Billions Of Dollars"
According to Reuters headlines, the White House has just announced that penalties for the oil spill will be in the "many billions of dollars" range. Then again, with Goldman downgrading BP and thus actively buying the stock, is all this now fully priced in? Elsewhere, DealBook's Peter Henning says that the criminal charges, which will likely be filed soon, will likely also result in fines and likely prison time if executives of the implicated company are found to have lied to the US government. "Criminal penalties for environmental violations are not as severe as
for other white-collar crimes. For a Clean Water Act violation, the
maximum fine is $25,000 a day and up to one year in prison for a
conviction based on negligence, and $50,000 a day and up to three years
in prison for a conviction based on conduct shown to be done 'knowingly.'" We hope someone has set up some markets on InTrade for over/unders on jail time for some of the key executives.
Some more from DealBook on the upcoming civil liability suits:
The direct costs to BP from the oil spill have escalated significantly since April. In its earlier disclosures to shareholders right after the rig accident, the company estimated that the costs would be approximately $6 million a day. BP stated Friday that it had spent more than $1 billion in response and clean-up costs, and that those are only increasing as the oil slick reaches further along the Gulf Coast.
BP and Transocean will be liable for all the environmental clean-up costs, under both the Clean Water Act and the Comprehensive Environmental Response Compensation and Liability Act. Halliburton’s work as a contractor on the well may also make it liable for the costs.
How much each company ultimately has to pay remains to be seen. Transocean disclosed that it has an agreement under which BP would “assume full responsibility for and defend, release and indemnify us from any loss, expense, claim, fine, penalty or liability for pollution or contamination, including control and removal thereof, arising out of or connected with operations under the contract.” This provision will doubtless be the subject of litigation once the government figures out what is owed for the oil spill.
Thousands of lawsuits have already been filed against the companies by those harmed by the oil spill, but there is an interesting limit on the amount of economic damages they may be liable to pay. Under the Oil Pollution Act of 1990, passed in the wake of the Exxon Valdez oil spill, an “offshore facility” is liable for “the total of all removal costs plus $75,000,000.”
There is a bill in Congress called the Big Oil Bailout Prevention Liability Act of 2010, introduced in early May, to raise the cap on economic damages to $10 billion. But as Professor Hall points out, “the $75 million cap does not apply to claims in state court or under maritime law, and as we saw from the Exxon case, that’s where most victims and potential plaintiffs will turn to pursue large claims against BP and other parties.” In addition, the cap is not available if there was a violation of federal safety regulations at the facility, a real possibility given what happened on the Deepwater Horizon.
One area in which the Exxon Valdez spill may actually help BP and Transocean is the limit the Supreme Court imposed on punitive damages in its 2008 decision in Exxon Shipping Co. v. Baker, which only allows such damages up to the amount of compensatory damages awarded. Juries in the Gulf Coast region will remember this spill long after its effects are mitigated, but the limit on punitive damages may keep down the costs of the disaster somewhat.
Finally, and perhaps inevitably, a securities class action complaint was filed against BP on May 21 alleging that the company misled investors about the risks from deep water drilling. We are unlikely to see claims against the directors of the companies for breach of a fiduciary duty because BP is a British corporation and Transocean is a Swiss company, and neither country’s laws are as accommodating of shareholder suits as the law in the United States. So at least that’s one less case their lawyers will have to deal with.
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It's pretty stupid to say this stuff before it's capped and we start cleaning up the mess.
In fact, now that you brought in the lawyers, they have *every* incentive to make sure the mess is even worse, and even more people are harmed, so they have a bigger "action" from which they skim their judgement awards.
Lawyers don't clean beaches. At this point, they will ensure nobody else does either.
Plus, "isn't this a bit awkward?"
http://pajamasmedia.com/instapundit/100697/
So wait, instead of fairly compensating the people and businesses harmed by the spill, the government will go on in collecting gazillions in fines?
Damn. Why the fuck didn't I go into government? What possessed me to work for a living?
+1. And we figure out why there is no environmental protection in the united states -- the regime fines them of cash that could have gone to injured parties. Or my personal favorite, the class action lawsuit whereby the company "settles" with a well-paid legal cabal.
Louisiana should just seceed, create a new court and allow civil claims against bp in their newly created country. There really is no advantage to Louisiana being apart of the US anymore.
Well ya. They fined the crap out of the tobacco companies and then spent the money putting little truth about big tobaco children into fully paid for, middle class housing at the age of 19 for making snide little commercials. None of it went to smokers or so little as to be meaningless.
Ya sure! Ya betcha!
Better put all that salt water gear on ebay and buy a bass boat.
I've probably got about $10k in offshore tackle sitting in the garage...just waiting for them to shut down the east coast offshore fishing here...hell, they have been talking about shutting down bottomfishing completely for the past few years.
Anyone need a Kristal electric reel?
Meanwhile...
TEHRAN — The Iranian Red Crescent has decided to send two aid ships to Gaza this week in the latest bid to break the blockade imposed on the Palestinian territory by Iran's regional archfoe Israel.
http://rawstory.com/rs/2010/0607/iran-red-crescent-send-aid-ships-gaza/
Another interesting issue in the BP/Transocean mess is:
The 2 companies are certainly insured for such catastrophes, and very likely with,yes, US insurers. This raises furthermore the question about their solvency, so ultimately the Fed Government (or Benron) will have once more to step in. That could explain why Obama team (or what is left of it) are so careful in their words about who will pay.
Just a thougt.
Because they knowingly allowed the oil rig to blow up?
The hysteria coming out of the US over this is hypocritical to say the least. For a country that is so attached to the teat of big oil it can't even begin to think of weaning itself off to get so worked up about "gasp" an oil company accident takes the biscuit. I suppose the thought of negligent action by any of those good ol' boys who tragically lost their life when the rig went tits up isn't worth consideration?
Drilling for oil in that region, with full knowledge of the Geology of the sea bed was RISKY writ large. But that didn't stop a licence for said activity being issued did it?
Oh, and when I hear of the Union flag being trampled into the dust by some of your compatriots, it does beg the question of how many more friends you plan to alienate.
It's also rather odd how over here all we hear regarding the "spill" is BP this or BP that - what about Halliburton & Transocean(?) there's more than one party involved here - plenty blame to go around. What about the US authorities - can't see them having nothing to do with the handling of this. Almost seems as if it's a good way to deflect anger away from someplace inconvenient and BP makes a darn good target...
There's a new book out that seeks to eliminate lying for half the people, not all, just half.
Not kidding. The book goes on to 'explain' that some people's minds work thusly: When pursuing a particular task, in this case counting the passes that one basketball team makes in a given fixed time frame, 50% of the people viewing the game will miss an actor in an Ape costume, right in the center of the viewing field, never saw it, so they don't remember it. As examples in 'real' life the authors excuse Hillary Rodman from her remembrances of being under fire in Kosovo when nothing of the sort happened.
You can count on this 'defense' being used by Lawyers seeking yet another way out of personal responsibility for one's actions, indeed they likely can't wait to use it in the excusing of Lord Blankfein's behavior and that of all his minions.
British Petroleum will declare bankruptcy. The assets will be secretly transferred to "British Oil Company" or some other shell company. The asset transfer will occur outside of the bankruptcy timelines and the game will begin again. This is and will always be an American problem. More to the point, this is and will be a poor man's problem as the only people that will do without are the fishermen, marinas, tourists and other Floridians.
The Feds don't speak for the individual States; yet this could end up being one helluva war over states rights. But really, who gives a damn about Gov't - big or little? All they want to do is castrate and control.
Short of a miracle, BP is finished if this gusher continues for even another month. Another two or three months? Hard to contemplate.
I was thinking by September BP is history. That said, I predict they pull a "Johns Manville"
Did they do this deliberately.....Goldman sold BP shares on March 31.....n then in the movie Knowing , a similar blowout was shown .....
Revelation 8:8,::A third of the sea turned into blood, 9 a third of the living creatures in the sea died, and a third of the ships were destroyed.
what the hell is going on....these illuminist are crazy ....
Meanwhile, justice has been served for Bhopal after 26 years. What were the Indian courts doing all that time?
The US government have to tread a fine line. They need to think of a number large enough to satisfy the US public and small enough that BP won't decide pulling out of the US and saying 'screw you guys' is cheaper.
BP want to stay in the US because they make a lot of money there. The calculation they will be doing right now is whether it is worth staying.
What a lot of people don't seem to understand is that most of BP is not inside the US. They make lots of money producing oil in the rest of the world outside USA.
If the US does go about seizing BP (and they can only seize the bits inside the US) they will probably find what they actually seized is a very large liability.
The rest of the business will continue making money for UK plc.
Welcome to capitalism.
When oilco executives start going to jail, safety technology will improve suddenly and dramatically.
Executives laugh at fines, but not at jail time.
There will be no jail time for the BP executives. They will buy their way out with shareholders money, and/or run off to Paraguay. USA is not China where, G-d Forbid, they would have already earned a bullet in the back of the head. We are more civilized here.... birdies and fishies, suck it up!
The White House should discuss the following:
BP chief Tony Hayward sold shares weeks before oil spill
Tony Hayward cashed in about a third of his holding in the company one month before a well on the Deepwater Horizon rig burst, causing an environmental disaster.
Mr Hayward, whose pay package is £4?million a year, then paid off the mortgage on his family’s mansion in Kent, which is estimated to be valued at more than £1.2?million.
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7804922...
Perhaps Zero Hedge could pair that article up with their previous article: A Series Of Lucky Coincidences Involving Goldman Sachs And BP plcEarlier, when observing the US AG disclosure of a civil and criminal investigation into BP plc, we noted in passing that BP's former Chairman, Peter Sutherland, who left the firm is a Chairman of Goldman Sachs International. There is an "odd" correlation between Goldman's sellside sentiment on the stock, and the amount of stock held by Goldman's asset management arm, especially evident in the days between December 31, 2009 and March 31, 2010, when despite a recent Buy rating attached to the firm, GSAM [Goldman Sachs Asset Management] sold off more than 40% of its stake in the name. http://www.zerohedge.com/article/series-lucky-coincidences-involving-gol... Together, they add up to something truly unique.
Interesting, Halliburton also factors into the BP/Goldman Sachs equation.
Boots & Coots Rallies on Halliburton Buyout Deal
Oilfield-services giant Halliburton Co. said late Friday it will buy Boots & Coots International Well Control Inc. in a cash-and-stock deal valued at about $232 million.
Shares of Boots & Coots, which provides pressure-control services as well as emergency response and control of oil- and gas-well blowouts and well fires, jumped 25% to $2.93 in early trading Monday.
http://online.wsj.com/article/SB10001424052702303828304575179911781259430.html
Halliburton May Be Culprit In Oil Rig Explosion
Giant oil-services provider Halliburton may be a primary suspect in the investigation into the oil rig explosion that has devastated the Gulf Coast,the Wall Street Journal reports.
Though the investigation into the explosion that sank the Deepwater Horizon site is still in its early stages, drilling experts agree that blame probably lies with flaws in the "cementing" process -- that is, plugging holes in the pipeline seal by pumping cement into it from the rig. Halliburton was in charge of cementing for Deepwater Horizon.
http://www.huffingtonpost.com/2010/04/30/halliburton-may-be-culpri_n_558481.html#
Just back from The Toxic Swamp, aka Florida. Tar balls in Pensacola only 60 miles from our venue. Nobody doing anything... gone from the shock to denial stage of mentality. This may be so BIG and so far GONE that nothing matters at this point... game, set, match! They have lots of guns down South....this will not end well.