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U.S. Department of Justice

Halliburton settles Deepwater Horizon claims for $1.1B

Kevin McCoy, and Rick Jervis
USA TODAY

Response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon on April 21, 2010.

Halliburton (HAL) has reached a $1.1 billion agreement aimed at settling most claims filed against the company related to the 2010 Deepwater Horizon oil rig explosion in the Gulf of Mexico, the oil-field services giant said Tuesday.

The settlement comes just over a year after Houston-based Halliburton admitted destroying evidence and agreed to plead guilty to a criminal charge for its role in the oil spill disaster that occurred at an offshore well of British energy giant BP (BP).

The tragedy, the worst offshore oil disaster in U.S. history, killed 11 workers.

Halliburton shares closed down fractionally at $67.49 after recovering from a steeper drop earlier Tuesday.

The settlement, which is subject to approval of a federal court in Louisiana, will be paid into a trust in three installments over the next two years until all appeals have been resolved, Halliburton said. Halliburton had previously accrued $1.3 billion to cover losses related to the disaster litigation.

The company said the agreement covers:

  • Claims against Halliburton stemming from BP's 2012 class-action settlement of claims filed by thousands of individuals and businesses that reported they were damaged by the disaster.
  • Punitive damages claims against Halliburton by plaintiffs who allege damage to property or to the commercial fishing industry in connection with the disaster.
  • Affirmation that Halliburton isn't liable for compensatory damages to the members of the settlement class in BP's 2012 settlement.

"Halliburton stepped up to the plate and agreed to provide a fair measure of compensation to people and businesses harmed in the wake of the Deepwater Horizon tragedy," said Stephen Herman and James Roy, co-lead attorneys for a steering committee of plaintiffs affected by the disaster.

Halliburton's tentative settlement is higher than expected — but still tens of billions of dollars less than what BP could potentially pay out for the catastrophe, said Blaine LeCesne, a New Orleans-based Loyola University Law School associate professor who has followed legal proceedings stemming from the disaster.

With the agreement, Halliburton removes itself from future liability regarding legal claims filed on behalf of thousands of fishermen, business owners and others who said their lives and livelihoods were ruined by the spill.

"Halliburton wanted out," said LeCesne. "Since their failed cement mixture is a the epicenter of culpability in this incident, they didn't want to take any further chances."

David Uhlmann, an University of Michigan environmental law professor and former chief of the U.S. Department of Justice's Environmental Crimes Section, said the settlement raises questions about the absence of criminal charges against the company.

"Halliburton did not admit negligence in today's settlement but the fact that they agreed to pay over $1 billion raises anew questions about why the Justice Department did not charge the company criminally for its role in causing the Gulf oil spill," Uhlmann said in an email reply to USA TODAY questions about the settlement.

Starting early next year, Louisiana U.S. District Judge Carl Barbier will preside over a non-jury trial, known as Phase 3 of the Deepwater Horizon proceedings. The trial is expected to determine the relative responsibility of each company responsible for the disaster and its aftermath, which could open the door to tens of billions of dollars in federal fines.

BP still faces $20 to $40 billion in penalties under the federal Clean Water Act and other environmental sanctions and settlements, said LeCesne. The British energy giant has already committed more than $40 billion in earlier settlements, clean-up costs and criminal fines, he said.

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