BP argues it's being bilked in spill claims

BP has launched a public relations offensive to argue it is being bilked for fraudulent damages related to the 2010 Gulf of Mexico oil spill.

BP claims the process, which its CEO labeled “absurd,” has been rife with abuse and that it has been overly generous in rewarding businesses and individuals who suffered no damages from the spill.

“Today we are working to ensure that our willingness to do the right thing is not taken advantage of and distorted to provide windfalls to undeserving businesses, including law firms,” BP spokesman Geoff Morrell said in a statement.

“While we remain committed to paying legitimate claims, we did not agree to pay for fictitious losses, or for claims that are based on fraud or tainted by corruption,” he added.

The effort, which comes three years after the company’s image took a beating over the spill, targets trial lawyers in particular. One ad in The Washington Post this week quoted the heads of the Chamber of Commerce and National Association of Manufacturers to denounce the claims process.

“[T]oo often these days, the tort system is nothing more than a trial-lawyer bonanza, and that’s not fair to individuals seeking redress and no way to encourage investment in manufacturing to create tomorrow’s high-paying jobs,” the BP ad said, quoting Jay Timmons, the CEO of the manufacturing group.

In addition to the ad campaign, BP has hired political powerhouse attorney Ted Olson — the solicitor general under former President George W. Bush — to argue part of its case against businesses the firm says undeservedly received payments.

Those making claims against BP say the company already agreed to a settlement, and that its complaints should fall on deaf ears. They argue BP just underestimated the damages it would need to pay out under the settlement it agreed to.

“They have no room to complain. Their complaint is based completely on the fact that they undervalued the claims in the settlement process,” Blaine LeCesne, a Loyola University New Orleans law professor who has studied the case, told The Hill.

BP agreed to a settlement for a class-action lawsuit last year with Gulf residents and businesses. The settlement included no ceiling on payouts by the company, and BP also did not agree to a geographic limit on where claims could be made.

The settlement established a formula for claimants based on revenue before and after the spill. LeCesne said it gives BP little “wiggle room” to contest claims.

BP, which has paid out about $26 billion total for restoration, cleanup and damages, set aside $7.8 billion for claims, but now says that pot will fall billions short.

Some argue the company made a mistake in not limiting the geographic area for claims and may have been in a rush to repair its image after President Obama and other politicians from both parties harshly criticized it over the spill.

“They didn’t cap it because they wanted to show how generous they are,” LeCesne said.

As oil spilled into the gulf for months, the company’s leaders were sometimes characterized as uncaring, particularly when then-BP CEO Tony Hayward was photographed on a weekend sailing trip.

While BP didn’t characterize why it was making its new public relations push, some suggest the blitz is designed to change public perceptions about the company.

Given that much of the advertising is in Washington, it may also be aimed at garnering political support to lessen pending Clean Water Act fines that are the subject of the ongoing federal trial.

“This is part of a broader strategy meant to minimize the per-barrel fine under the Clean Water Act,” LeCesne said, explaining a judge can lower that fine if it believes BP already has incurred damages for those violations or if it significantly harms BP’s finances.

Steve Herman and Jim Roy, who represent the Gulf spill claimants, said in a USA Today op-ed that BP is trying to create an “alternate history” that distracts from the fact its 2010 incident killed 11 workers and spewed 4 million barrels of oil into the Gulf.

But Morrell argued that while BP might have done wrong with the spill, it is now being wronged. The company hopes its message will be heard in Washington.

“We are defending our rights, shining a light on abuses and keeping people informed. We owe it to our shareholders and employees to do so, and we believe everyone should know that the unmooring of this settlement from the express terms of the agreement changes the calculus other businesses will consider when deciding whether to settle or litigate,” Morrell said.