* BP, Justice Department seek to settle civil, criminal
* More downside than upside seen for Obama politically
By Chris Baltimore
HOUSTON, Oct 27 For a president locked in a
tough re-election fight, it may look like political gold: a
settlement between the U.S. Justice Department and BP Plc
over the Gulf of Mexico oil spill that could send billions of
dollars to Florida, one of a handful of politically divided
states that could decide the Nov. 6 contest.
Yet a last-minute settlement with London-based oil giant BP
is unlikely before the election, experts say. Neither the
Justice Department or President Barack Obama, whose race with
challenger Mitt Romney is deadlocked in most polls, want to
appear to politicize a deal. And Obama appears to face more
potential risks than benefits from any settlement at this point.
BP has been locked in a year-long legal battle with the U.S.
government and Gulf Coast states to settle billions of dollars
in civil and potential criminal liability from the April 20,
2010, explosion aboard the Deepwater Horizon rig that killed 11
workers and soiled the shorelines of four Gulf Coast states in
the worst offshore spill in U.S. history.
BP and the Justice Department have had protracted
closed-door negotiations on a settlement to avoid a potentially
years-long court battle. But experts say that any settlement
with BP would be complex enough to allow Obama's critics to
attack him. And as they say in Washington: If you're explaining,
"No matter what the President does, he can't win on this one
because it's not going to be good enough for someone," said
James Lucier, managing director at Capital Alpha Partners LLC in
"A TERRIBLE IDEA"
To date, the spill's profile in the 2012 presidential
campaign has been slim. And inking a settlement with BP at this
point could open Obama up to attacks as someone who buckles to
Big Oil. A pre-election settlement of the Justice Department's
biggest ongoing case could also be seen as playing politics with
the law, said David Uhlmann, a University of Michigan law
professor and former head of the Justice Department's
environmental crimes section.
"It would be a terrible idea for the Justice Department to
announce a settlement over the last two weeks before the
election," Uhlmann said, predicting instead a deal before the
civil trial next year.
U.S. District Judge Carl Barbier in New Orleans, presiding
over a sprawling three-part non-jury hearing to decide BP's
liability for the spill, said on Friday the trial will begin on
Feb. 25, 2013. The trial, which had been delayed by nearly a
year already due to a pending $7.8 billion BP settlement with
private plaintiffs, had been set to start on Jan. 14. The delay
leaves more time for a pre-trial deal.
In big settlements, the Justice Department has striven to
avoid the taint of politics, and the BP case is no different,
But politics has run through the BP spill from the day it
happened. Gulf Coast states stand to reap billions of dollars in
funds from a potential BP settlement, thanks to a law passed by
Congress that would route 80 percent of funds to the states from
violations of the Clean Water Act.
That amount could approach $17 billion if BP is found
grossly negligent in the disaster, experts say. The well spewed
4.9 million barrels of oil into the Gulf of Mexico over a period
of 87 days. The torrent fouled shorelines from Texas to Alabama
and eclipsed in severity the 1989 Exxon Valdez spill in Alaska.
FLORIDA'S ELECTORAL VOTES
Florida and its potential 29 electoral votes are one of the
key prizes seen as tipping the Nov. 6 presidential election. So
the temptation may be great for Obama's advisers to gain favor
with voters there by agreeing to a jumbo settlement before the
election, said Kevin Book, managing director at ClearView Energy
Partners LLC in Washington.
"We know the Administration wants one, and the best
political timing for a final deal is probably right about now,"
But any political good will from the deal could be
over-rated. Of the Gulf Coast states affected by the spill,
Florida is the only one that appears to be within Obama's reach,
with polls in others leaning heavily toward Romney.
A pre-election settlement could also expose Obama to
criticism for selling out Gulf Coast politicians and
environmental groups. Rumors have been flying.
Gulf Coast lawmakers recently and loudly protested press
reports that BP and the Justice Department have discussed
shifting settlement payments based on the Clean Water Act - with
their promised billions of dollars to Gulf state coffers -
instead to payments based on natural resource statutes, which
would not only go to the U.S. Treasury but also be
tax-deductible for BP.
"BP, who is responsible for this, would also get a tax
deduction that could write off millions," Representative Jo
Bonner, an Alabama Republican, told Reuters. "The audacity of
giving BP a tax write-off!"
Environmentalists are also worried about press reports that
peg BP's settlement offer is as low as $18 billion -- far short
of penalties demanded by U.S. environmental and criminal
"We believe a full throated debate over the settlement amount
needs to happen before any deal is done," said John Kostyack, a
vice president at the National Wildlife Federation, who
estimates BP's potential liability at more than $50 billion.
Given the prolonged and secretive negotiations, state
officials have also warned the Obama administration not to rush
headlong into a deal with BP.
"Personally I believe the Administration does have a desire
to make an announcement, which has the potential to cloud their
judgment," said Garret Graves, senior environmental advisor to
Louisiana Gov. Bobby Jindal.
After paying nearly $4 a gallon for gasoline over the
summer, potential voters would also likely have no patience
seeing Obama let a big oil company off the hook with a spill
settlement that stops short of maximum potential penalties.
"A settlement that is not tough enough makes him look like
he's letting BP off the hook," Lucier said. "It's much better to
do this outside of the context of a presidential election."