British Petroleum's whining about how it's being fleeced by excessive claims from the 2010 Deepwater Horizon oil spill is one of the more breathtaking examples of corporate revisionist history.
The legally binding settlement agreement BP is now trying to extricate itself from is the same agreement the company's lawyers spent months negotiating and arguing passionately for in open court, in exchange for a release of all commercial liability associated with the spill.
The compensation formulas were developed by BP, agreed to by BP, and attested to under oath by BP. Now the company feigns surprise that the overall liability associated with its settlement program may exceed $7.8 billion.
Why so much? Because the Deepwater Horizon disaster devastated the Gulf Coast economy.
A new report issued in July estimates that Gulf eco-tourism alone generates more than $19 billion annually. That's over twice the amount BP set aside. And the businesses most impacted are often located miles inland, simply because it does not make economic sense to house your construction company or beer distributorship on some of the most expensive beachfront property in the country. Yet the tourism industry those companies serve (or rather didn't serve in post-spill 2010) was devastated by the spill.
BP complains that payments should not be made to such businesses because there is no way they could have been impacted. Au contraire, British Petroleum. Businesses located well inland were some of the most damaged.
To be clear, businesses that were not affected will not be compensated. Claimants that do not meet BP's precise and objective criteria will not qualify for payment. Businesses whose financial records do not reflect the required revenue trends designed by BP will be rejected. That said, because this area is so wed to tourism, it just so happens that a large number of local companies qualify.
BP mistakenly declared that the cost associated with the program would not exceed $7.8 billion. Representations to the same effect were made to shareholders and Wall Street. This, in spite of the fact that the company expressly agreed that settlement funding would not be capped.
The uncapped nature of the agreement was the result of hard-fought negotiations by the parties and was an important aspect the court relied upon in approving the settlement.
It turns out that this number, $7.8 billion, was pulled from thin air by BP. Attorneys representing the plaintiffs cautioned the company very early on about making such representations to its shareholders. Nevertheless, BP shouted it from the mountaintops.
Now BP needs an out, so it blames the victims, while it could find the true culprit by looking in the mirror.
I would like to correct some of the misinformation surrounding BP's current court challenge and media campaign:
BP selected the claims administrator: BP selected and proposed Patrick Juneau to be appointed by the court as claims administrator for the court-supervised settlement program. He is an unbiased, third-party, neutral actor with no dog in the fight. Juneau is respected by both sides of the Bar, and has been appointed by courts across the country to serve as special master or mediator in high-stakes litigation. Now BP is suing him.
BP selected the accounting firms: BP selected and proposed, among others, PriceWaterhouse (PwC) as a program vendor for the settlement program. PwC, one of the largest accounting firms in the world, had been previously hired by BP to assist the company in analyzing claims immediately following the spill. PwC was therefore not only trusted by BP but also familiar with oil-spill related claims. PwC has always interpreted the settlement agreement exactly the way that Juneau, supervising federal Judge Carl Barbier and plaintiff counsel have.
In fact, BP had always interpreted the agreement in an identical manner. Not until the company started bumping up against that imaginary $7.8 billion number did it change its tune.
BP's own experts disagree with the company: BP's expert, Holly Sharp, studied the settlement agreement and submitted a sworn declaration to the court in August 2012: "Once a business meets the causation requirements . all revenue and variable profit declines during the claimant-selected compensation period are presumed to be caused by the spill, with no analysis required to determine whether the declines might have been due, at least in part, to other causes."
Now BP calls such claims "fictitious."
BP's own lawyers disagree with the company: BP's counsel, in a letter to the claims administrator in September 2012, reiterated that "One of the cornerstones of the Settlement Agreement is the use of transparent, objective, data-driven methodologies designed to apply clearly-defined standards to a claimant's contemporaneously-maintained financial data submitted in compliance with documentation requirements."
Now BP wants to decide whether a claim should be paid.
It is preposterous for BP to now attempt to change those rules well into the game, and it is shameful for the company to vilify those who played by the rules as they were originally written, interpreted and implemented by the company.
The law office of Thomas L. Young, P.A., of Tampa focuses exclusively on representing corporations and business owners under the BP Deepwater Horizon Economic Loss Settlement Program.