Wednesday AM July 23rd, 2008
by: Ed Mayberry, July 23, 2008 4:07:00 am
The last four plaintiffs in the latest civil trial from the BP Texas City refinery explosion settled their claims for undisclosed amounts this week in the ninth week of the trial. Six cases had earlier been settled out of court. Two other trials ended in settlements before jurors could deliberate, but this one lasted long enough for BP to mount a defense. Plaintiffs' attorney Brent Coon says the trial exposed overwhelming documentation proving advance knowledge of potential tragedy.
"BP knew they were guilty. The evidence of their guilt was overwhelming. In all the case I've handled over all the years I've never seen anywhere near this voluminous amount of culpable documentation reflecting a level of conduct that resulted—heck, it resulted in criminal prosecution, it was so bad, which is almost unheard of in the petrochemical sector for just an industrial incident. And it was well deserved. OSHA fined them $20 million, which doesn't sound like a lot, but that's twice as much as they've ever fined anybody, ever."
Coon says the fact that OSHA levied its largest-ever fine to BP and that so much documentation existed reflected a high degree of culpability.
"BP acknowledged that early on because they had no choice, and their only defense was just to try to say by acknowledging ‘we're at least at fault, maybe the public and the jury would not punish us for the exemplary damages that they could be exposed to otherwise. So that was just a strategic decision they made for public relations purposes and damage control. But nonetheless, that admission and the willingness to negotiate from that position of weakness helps facilitate resolution to a lot of cases."
BP has said its goal from the beginning has been to fairly compensate people harmed by the blast. The 2005 explosion killed 15 people in a trailer 121 feet away and injured scores more. BP has set $2.1 billion aside to settle blast-related litigation. Seven cases are still pending out of some 4,000 claims filed, and State District Judge Susan Criss has set a last trial date in September. She says attorneys believe only two disputed claims could end up going to trial.
A judge in Houston says lawsuits against military contractors over deadly ambushes that killed civilian truck drivers in Iraq could go to trial next year. U.S. District Judge Gray Miller told attorneys to push forward so they could be ready for trial, possibly in September 2009. The suits filed by truckers and their families accuse Houston-based Halliburton and former subsidiary KBR of knowingly sending convoys into a dangerous area. The area is where six KBR drivers were killed and several others wounded in 2004. KBR says its top priority is the safety and security of all of its employees. Miller dismissed the cases in 2006, ruling the army plays a key role in deploying convoys and the judiciary can't second-guess battlefield decisions. But an appeals court in May returned the case to Miller, saying it may be possible to resolve it without making a "constitutionally impermissible review of wartime decision-making."
The Environmental Protection Agency is putting off a decision on Texas' request to waive ethanol requirements for gasoline. A decision had been due Thursday. But EPA administrator Stephen Johnson said the agency needs more time to review more than 15,000 public comments it has received. Governor Rick Perry asked the EPA in April to halve the ethanol requirement this year. An energy bill passed last year requires nine billion gallons of ethanol to be blended into gasoline this year. Perry wanted the EPA to drop the requirement to 4.5 billion gallons because the demand for ethanol is raising corn prices for livestock producers. The agency said it hopes to have a decision in early August.
A government report says U.S. home prices fell 4.8 percent in May from the same month last year. The Office of Federal Housing Enterprise Oversight also says prices, on a seasonally adjusted basis, fell 0.3 percent from April to May. The index is down almost five percent from its peak in April of last year. OFHEO oversees the government-sponsored mortgage-finance companies Fannie Mae and Freddie Mac. The index is calculated using mortgage loans of $417,000 or less.
Disappointing news for another large bank. Wachovia says it lost nearly $9 billion in the second quarter. It substantially cut its dividend and will cut more than 6,300 jobs. Shares have fallen to mid-1991 values in premarket trading. The nation's fourth-largest bank by assets says it lost the equivalent of $4.20 per share in the period from April to June. The Charlotte-based bank cut its quarterly dividend to five cents per share, down from 37.5 cents. That'll conserve approximately $700 million of capital per quarter. Wachovia's chairman calls the results "disappointing and unacceptable." Late Monday, Wachovia announced plans to leave the wholesale mortgage lending business.
A Congressional committee has told the EPA that letting a Port Arthur plant import toxic waste from Mexico would "effectively create an open border" for disposing a banned chemical compound in the U.S. Veolia Environmental Services has proposed importing up to 20,000 tons of PCBs from Mexico to a facility in Port Arthur. The Environmental Protection Agency has indicated it will approve the plan. But the U.S. House Committee on Energy and Commerce, which oversees the EPA, has asked the agency's federal chief administrator to reconsider. In a letter, the committee raised concerns that included a risk to the health of residents of Port Arthur. An EPA spokeswoman said the agency had received the letter and would give it careful consideration. Federal law bans the import of PCBs. But the EPA has the power to grant exemptions on a case-by-case basis for up to a year. The Houston Chronicle reports that the agency has until August 4th to respond to the committee.
The Texas plant where health officials found salmonella on a single Mexican-grown jalapeño is recalling its fresh peppers. The Food and Drug Administration's food safety chief says the discovery of the same strand of salmonella in the nationwide outbreak on the pepper is a "very important break." But the case isn't closed yet. And tomatoes, the original suspects in the outbreak that has sickened more than 1,200 people in 43 states, aren't totally exonerated yet. The FDA hasn't said how far produce from the plant near the Mexican border may have traveled, although it's not considered a major processor. Investigators are trying to figure out where the pepper became tainted--on the farm, in the plant in McAllen, or at some stop in between. For now, the FDA is warning against eating fresh jalapeños and products made with them, such as fresh salsa. Tomatoes now on the market are considered safe to eat.
A shareholder group is trying to pressure Electronic Data Systems into demanding more than the $13.2 billion buyout offer from Hewlett-Packard. The group said it intends to ask a judge in Collin County, Texas, to postpone the shareholder meeting that Plano-based EDS has scheduled for July 31st. That's when investors are scheduled to vote on whether to approve HP's takeover of EDS. A hearing is set for Thursday. The group believes that the EDS board agreed to sell the company for too little money. HP is offering $25 per share for EDS, a nearly 33 percent premium over where EDS stock stood before the proposed acquisition was announced in May.
General Motors is looking down the road to solve potential problems for the electric cars it plans to roll out in about two years. GM has joined with more than 30 utility companies to address potential issues from tax incentives for the vehicles to where and when they can be plugged in for recharging. GM hopes to bring the Chevrolet Volt rechargeable car to showrooms in late 2010. It's being designed to run on an electric motor powered by lithium-ion batteries. When fully charged, it will be able to go 40 miles on battery power. For longer trips, a small internal combustion engine will recharge the batteries to keep the Volt moving. GM and the utilities plan to announce the partnership Tuesday at a conference on plug-in hybrid electric vehicles in San Jose, California.
American Airlines has dropped a lawsuit against Internet search leader Google. The Fort Worth-based carrier was upset over Google users being directed to ads for competitors when searching for American services. The airline said the results could confuse consumers and divert customers from its own Web site. A federal judge last week dismissed the lawsuit, which had sought unspecified damages. Each side agreed to pay its own legal fees, and American recovered nothing from Google, according to an order signed by Judge John McBryde. The Internet company has settled similar cases brought by other U.S. companies, including those brought by insurer Geico, but lost cases in France.
Giant oil companies like ExxonMobil and ConocoPhillips are getting ready to report what will probably be another round of eye-popping quarterly profits. But just where is all that money going? The companies insist they're trying to find new oil that might help bring down gas prices. But the money they spend on exploration is nothing compared with what they spend on stock buybacks and dividends. The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year. That's up from 30 percent in 2000 and just one percent in 1993, according to Rice University. The percentage they spend to find new deposits of fossil fuels has remained flat for years, in the mid-single digits. Some critics say big oil focuses too much on boosting stock prices, in an industry that sometimes ties executive pay to stock price. The issue has become more sensitive as lawmakers and Americans frustrated by high gas prices have balked at gaudy reports of oil industry profits. ConocoPhillips is scheduled to kick off the latest round of big oil earnings reports Wednesday.
Halliburton announced its second-quarter profit fell about two-thirds from one year ago--but the company has record revenues. It was last year when the oilfield services provider recorded a nearly $1 billion gain from the separation of former subsidiary KBR. Income from continuing operations met Wall Street forecasts. Halliburton, with corporate offices in Houston and Dubai, said earnings for the April-June period were $507 million. That compares with year-ago profit of $1.53 billion, which included a $933 million gain from the KBR separation. Revenue rose to a record $4.48 billion--from $3.73 billion one year ago. Halliburton Chairman Dave Lesar says he's pleased with results for the second quarter as the company continues to show healthy expansion on a worldwide basis.
In the midst of a cruel summer for America's drivers, there's a diversion: television at the gas station. The number of televisions atop gas pumps has skyrocketed since their introduction at a handful of stations in 2006. Now, three privately held companies have placed more than 20,000 screens at thousands of stations from the Massachusetts Pike to southern California. Roy Reeves, vice president of sales and marketing for California-based PumpTop TV says "we try to bring some fun to the pump." The TVs are also bringing in added revenue for gas retailers, who have recently seen their margins shrink because of an increase in fuel load costs and credit card fees. When the owners advertise anything from candy bars to car washes on the TVs, they say in-store sales rise compared to other stations without the screens. Gas Station TV says that in tracking its retailers' sales, stores with screens installed on pumps report selling 75 percent more car washes and 69 percent more snacks if those items are advertised. The other two companies report similar sales increases.