BP Close to Spill Settlement

http://online.wsj.com/article/SB10000872396390444657804578048920996458306.html?mod=googlenews_wsj

Among key points of contention in a potential settlement is the degree to which BP was negligent, which determines the scale of damages. The Gulf Coast states also are concerned about which laws the government uses to assess penalties against BP, which could affect where the money flows and how it is spent.

BP could be liable for between $5.4 billion and $21 billion in civil penalties under the Clean Water Act alone, depending on whether it were found to be grossly negligent, which it has denied. A settlement at the higher end of that range could imply some negligence on BP's part and empower plaintiffs with pending lawsuits to seek higher damages, legal analysts said. As of last month, the two sides were about $6 billion apart on a final settlement figure, according to one person familiar with the negotiations.

The Justice Department is also weighing whether to levy fines through a provision of the Oil Pollution Act called the Natural Resource Damage Assessment, according to people with knowledge of the negotiations. BP could deduct the costs assessed under the Oil Pollution Act, reducing its tax liability, which legal experts said could be an incentive for BP to settle.