On eve of oil spill trial, no deal reached

NEW ORLEANS – Lawyers for various companies, Gulf states and the federal government continued to prepare for Monday’s civil trial over the 2010 oil spill as they anxiously awaited news of whether a last-minute settlement would be reached.

As of Sunday evening, the trial in federal court in New Orleans was moving forward as scheduled and no deal had been reached, according to people familiar with the matter.

It was unclear, however, if the Justice Department and the states had presented to BP an offer that they had prepared and, if so, what response they may have gotten.

U.S. District Judge Carl Barbier would likely issue a court filing delaying the trial if there were any major settlements. No such filing had been issued as of the eve of trial.

BP’s own statements, and analyses prepared by people it hired, may make it difficult to defend itself against billions of dollars more in penalties related to the Gulf of Mexico disaster.

As the civil trial is set to get under way over a web of litigation related to the disaster, the U.S. government believes it has an ace in the hole – the British oil giant itself.

Justice Department lawyers say they have proof that three months after BP’s Macondo well blew out and the Deepwater Horizon rig exploded off Louisiana, killing 11 workers, company engineers reached conclusions “strikingly similar” to what government scientists found about how much oil was flowing. They suggest the company has reversed course since then to limit its exposure.

With so much at stake, the sides have continued to talk about possible settlements, and could settle even after the trial starts.

Lawyers involved in the case say that if BP and the U.S. government settled the Clean Water Act claims, the states settled their natural resources damage claims with BP, or some of the other parties also reached deals, the court might delay the trial to reorganize the case.

One of the difficulties with any settlement prior to trial at this late stage is that there have been differences among the states and federal government on the best way to proceed.

According to a recent BP filing, the cumulative amount of economic damage claims being asserted by the Gulf states and local communities is roughly $34 billion. That figure does not include federal Clean Water Act claims or natural resources damage claims. BP faces a maximum Clean Water Act penalty of $17.6 billion.

BP has said repeatedly that it has been willing to settle the case, but only on terms it believes are reasonable.