BP Braces for Lawsuits

How much will they cost? And is BP buying scientists' silence?

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Though the flood of oil has been checked, Act Two of the spill in the Gulf, apparently, is going to be the lawsuits. In the past week, stories have been flowing in about BP's legal liability for the disaster and the company's quiet preparations for the courtroom. What do we know about the lawsuits on the way, and how the company is getting ready?

  • It's Going to Cost a Lot  Stopping the leak itself is relatively cheap, writes Business Insider's Gus Lubin. "BP's biggest estimated cost is damages--those thousands upon thousands of lawsuits--followed by EPA fines." Citigroup, he notes, thinks BP will wind up spending $3.8 billion on the spill total, while BP's cashflow in 2011 is estimated to be about $41.6 billion. Summarizes Lubin: "BP will have enough cash to pay for the disaster, but it will be painful."
  • There's Money Set Aside, But It May Not Be Enough  "The $18 billion fine combined with the $20 billion escrow," explains 24/7 Wall St.'s Douglas McIntyre, writing of the $20 billion account BP set up for liabilities and other costs, "may not cover lawsuits by those who claim their livelihoods where destroyed by the leak. It also does not include shareholder suits by those who own shares in BP and have lost 40% or more of the value of their investments."
  • Lawsuits Over the Secrecy  Jess Leber at Change.org focuses on a certain five of the over 200 lawsuits: the ones charging BP and Transocean "under a 1970 federal racketeering law for conspiring to conceal the safety shortcuts and oversights that culminated in the Deepwater Horizon blowout." Leber thinks the whole thing sounds like Don Corleone reincarnated as an oil baron:
[T]hese executives are more likely to wield threats of mass job losses and fuel price spikes rather than baseball bats as their weapon of choice ... [The suits] include charges of wire and mail fraud to file "false documents" with the feds, misleading investors, and attempting to "infiltrate" the confidences of federal regulators with favors including alcohol, drugs, sex, and golf trips. These are civil lawsuits, but the Justice Department has also not yet ruled out seeking criminal penalties under the law, known as RICO, the article reports.
  • The Government's Case  "The federal government is expected to file a massive Natural Resources Damage Assessment lawsuit against BP, and it'll have to draw on large amounts of scientific research to build its case," explains CBS News analysis.
  • BP Already 'Buying Up' Scientists in Preparation  It's "to be expected," writes Americablog's Chris Ryan, who is nevertheless disturbed "that the scientists are willingly going along with it." John Timmer at Ars Technica dives deeper into the conflict of interest presenting itself in the scientific community. BP is apparently offering Gulf-area scientists a contract: a sort of consultation gig that involves the scientists not publishing data they collect for at least three years. Simultaneously, they're lining up potential expert witnesses from the scientific community for court Writes Timmer:
Some of the fields that will be supplying data essential to interpreting and mitigating the impacts of the BP oil spill are unlikely to have the same sort of history and institutionalized procedures for dealing with conflicts of interest. But, given how closely the public is likely to be following the cleanup efforts, it's a safe bet they'll be developing them quickly.
This article is from the archive of our partner The Wire.