By Sid Salter, Syndicated columnist
The Picayune Item
The Deepwater Horizon rig blew up 50 miles off Louisiana on April 20, 2010. It took BP more than 85 days to cap the gushing well on the floor of the Gulf. By that time, an estimated 172 million gallons of crude oil had poured into the sea. The Mississippi lawsuits also name rig owner Transocean Ltd., cement contractor Halliburton and lease minority owner Anadarko Petroleum Corp. as defendants.
The explosion killed 11 workers (including Mississippians) in addition to the staggering environmental and economic damages. As noted in a prior column, the choices of Moore and Quin to handle this complex case will likely prove to be wise.
Progressing to a final settlement in the case remains difficult for plaintiffs and defendants alike.
What may prove most interesting as Mississippi and the states of Texas, Louisiana, Alabama and Florida press their litigation against BP is that a significant number of local (municipal and county) governments are also pressing their own litigation against the oil company. U.S. District Judge Carl J. Barbier last week denied BP’s request for an injunction to temporarily suspend settlement payments until an investigation into alleged fraud in the claims payment program can be undertaken.
BP has maintained that the claims office is “misinterpreting” the language of the claims payment agreement to their financial detriment and has offered to this point vague allegations of fraud. But Hood and others have characterized BP’s attempt to get an injunction “buyer’s remorse” from a claims process they helped create that is overseen by personnel they jointly recommended for the job.
The government claims have an interesting twist for Mississippians.
The Oil Pollution Act of 1990 allows governments to be reimbursed for net lost revenue from taxes, fees or other sources that officials couldn't collect and couldn't mitigate as a direct result of a spill. At a glance, the stakes appear huge for Mississippi local governments — running into perhaps hundreds of millions of dollars.
Officials in Bay County, Florida (Panama City is the county seat) agreed to settle their lost-revenue claim with BP for $15.3 million, which came to $12.5 million after attorneys' fees. The lawsuits also name rig owner Transocean Ltd., cement contractor Halliburton and lease minority owner Anadarko Petroleum Corp. as defendants.
But a source close to the litigation says that while Mississippi indeed has a significant number of local government plaintiffs looking to get reimbursed for losses under the Oil Pollution Act, those claims may be compromised by the fact that the state of Mississippi collects sales tax and then doles out a percentage of those collections to local governments. Cities receive only 18.5 percent of the 7 percent sales tax collected by the state.
While local governments may well collect lost fees and assessments, the more likely outcome on lost sales tax revenue is that local governments will be forced by the courts to negotiate with the Mississippi Legislature for those sums after the state’s settlement is finalized. Since the state collects the sales tax and then reimburses the local governments, such an outcome would seem appropriate.
The bottom line is that there are big expectations about how much money BP will ultimately pay to Mississippi claimants — public and private. The government claims are only a portion. But one key factor to watch is whether local governments in Mississippi with legitimate claims are forced by the simple method with which sales tax is collected in this state to negotiate with the Legislature for their fair share of BP settlement proceeds.
As has been the case with the so-called “wind pool” issue in the Legislature since Hurricane Katrina, regionalism is almost certain to plague those discussions.
(Sid Salter is a syndicated columnist. Contact him at 601-507-8004 or firstname.lastname@example.org)