BP And The State Of Louisiana Are Basically At War

Centuries ago,
as we have written, companies used to run their own armies to wage war against nations sitting on precious resources.

Today, of course, companies have eliminated their infantry divisions, transferring those units’ salaries to their legal departments.

But wars themselves are not dead.

So it is that BP and the state of Louisiana find themselves locked in virtual combat as the British-based oil giant contests its legal responsibilities for the 2010 Deepwater Horizon blowout.

Seemingly not a day goes by that BP does not open up a new front on the bayou.

Yesterday, it asked for an injunction against the state’s order to remove thousands of stray oil boom anchors left over from the original cleanup.

The state says they pose a safety threat to boaters.

BP argues the anchors were federally mandated and that a Coast Guard study found that not leaving them in place posed an environmental hazard.

Earlier this week, BP ran a full-page ad in the New York Times heralding the latest findings from an ongoing federal investigation into the corruption in the office of the spill’s claims administrator.

And last month, Gov. Bobby Jindal, along with one of his deputies, got into a verbal spat with the company, each side accusing the other of grandstanding over the progress of paying out spill claims.

The fight over claims is the war’s real front line.

And BP makes a decent case it’s getting hosed.

Former FBI director Louis Freeh, appointed this July to lead an investigation into the claims payments, found many of the executives and senior attorneys staffing the claims office engaged in “improper” and “unethical” behaviour.

“The nature and seriousness of this type conduct varied in degree but was pervasive and, at its
extreme, may have constituted criminal conduct,” he wrote.

For instance, a senior attorney in the claims office was found to be taking fees from a law firm in exchange for funelling cases to it.

Judge Carl Barbier, who is overseeing the multi-billion claims process, says the $US7.9 million claimed by the firm charged should now be thrown out.

Freeh is not the only one to find misconduct.

A 2011 from ProPublica’s Kim Barker investigation on “spillionaires” found examples of apparent gouging of the company in the wake of the spill, with local insiders landing lucrative cleanup contracts, then charging BP for expenses:

“This parish raped BP,” said Wayne Landry, the chairman of the St. Bernard Parish Council, referring to the conduct of its political leadership. “At the end of the day, it really just frustrates me. I’m an elected official. I have guilt by association.”

BP unsuccessfully tried to halt the claims process entirely while Freeh conducts his investigation, arguing illicit funds could still be getting paid out.

It also thinks claims administrator Patrick Juneau is giving an overly generous interpretation of eligibility to file for damages, and it has filed a case with the 5th Circuit Court of Appeals. Freeh has found no wrongdoing on Juneau’s part.

The 5th Circuit is also hearing the company’s case that the $US9.6 billion class-action settlement establishing the claims fund should be thrown out entirely if the court doesn’t decide in favour of the company against Juneau. Bloomberg says the cost of the original settlement has swollen by $US2 billion.

Juneau is now accusing BP of “slow walking” the claims process.

Of course, one must consider the damage to Louisiana economy’s and the environmental impact of the Gulf in all this.

The multi-billion settlement didn’t come out of the blue — the spill was, after all, the worst in U.S. history.

But for what it’s worth, BP’s share price has not recovered since the accident:

That the conflict now looks to drag into its fourth year is not unusual. Exxon’s fight with Alaska over reparations following the 1989 Valdez spill touched three decades.
That spill was several orders of magnitude smaller than the Deepwater Horizon discharge (less than ~1 million barrels for the former versus ~5 million for the latter), though it occurred in a much more confined space.

This fight may have only just begun.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.